Thursday’s session brought a clear recovery on the European markets
According to the morning futures, after a great Wednesday on Wall Street, the indices opened clearly in the positive territory, and a slight correction in the first hours of trading started an upward move that lasted until the end of the day. He was in no way disturbed by the discussion panel in Sintra, during which the governors of the world’s most important central banks discussed the future shape of monetary policy. In general, the conversation did not bring much new – a strong labor market in all major economies remains for them the main argument for a long-term fall in inflation.
The deterioration in the recent data from Europe did not strongly influence the rhetoric about the high chances of a “soft landing”. C. Lagarde called on eurozone governments to reduce fiscal spending to allow inflation to fall to the target, similarly to J. Powell saying that although the cycle is advanced, it is not over yet, stating directly that now everything points to the need for another hike in July . Nevertheless, the euro was clearly weakening, correcting from around 1.0950 to 1.09, the pound also lost more than 1%, although it is not easy to point to A. Bailey’s statement that could have led to its sell-off. The continent’s major stock markets closed with gains ranging from 0.52% (FTSE100) to 0.95% (IBEX).
WIG20 increased by 0.28%, mWIG40 by 1.00% and sWIG80 by 0.48%. Banks corrected slightly (-0.09% at the sector level), KGHM more clearly (-1.12%), but in the first row of companies little happened. mWIG looked much more interesting, with Tauron gaining 6.08%, developers’ shares clearly gaining in price (in the case of Develia and Dom Development by more than three percent), and 26 companies of the index closed in the plus.
The S&P 500 fell 0.04% and the NASDAQ gained 0.27%. The situation could have looked much better, but a fairly clear brake on the semiconductor sector were reports that the US plans to tighten restrictions on the export of the most modern chips from NVIDIA to China. The company generates about 20% of its revenues there, an unfavorable decision could concern about 7%. However, the reaction was very calm, although during the day the declines were greater, the final balance of the session is a discount of only 1.81%. Clearly losing initially, AMD closed almost neutrally (-0.20%). NASDAQ’s sell-off was prevented by rising FAAMG and Tesla stocks (+2.41%). Semiconductors can also count on a rebound today (you can already see them in Asia) after a good report from Micron, which gained 3% in aftermarket trading.
Most Asian stock markets are falling today, Hang Seng looks the worst again, Nikkei is slightly up. US index futures suggest cautious optimism, the opening in Poland and Europe will probably take place around neutral levels. The course of the day will probably be influenced by flash inflation readings from Germany and Spain, yesterday’s data from France are rather positive. Price dynamics in the Iberian Peninsula will probably fall below the ECB target – CPI is expected to fall from 3.2% y/y to 1.7% y/y. Inflation in the euro area’s largest economy will go in the opposite direction – an increase from 6.1% y/y to 6.3% y/y is expected, driven by base effects (in the case of HICP, an increase from 6.3% y/y may take place to 6.7-6.8% y/y). This is due to the fading effect of last year’s drastic reductions in ticket prices, which were supposed to help the society cope with the sharp increase in fuel and energy prices. The final US GDP reading for Q1 2023 will probably have little impact on the market (a minimum revision of 1.4% QoQ is expected).
Kamil Cisowski Director of the Analysis and Investment Advisory Team at Dom Inwestycyjny Xelion
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