End of a crazy week. This is what you can expect in the markets from Monday
The post-election week in Poland was marked by the strengthening of the zloty and increases on the Stock Exchange. However, the emotions have already subsided. Here’s what’s in store for us next week.
Last week saw unprecedented increases on the WSE and the strengthening of the Polish zloty. The high variability is the result of the results of the parliamentary elections. Global markets, however, were at risk of tensions in the Middle East.
Gold in war conditions is again acting as a safe haven and has risen to over USD 1,980. Oil is also benefiting from the geopolitical turmoil as the market fears the US will once again rigorously enforce sanctions on Iran. The dollar depreciated slightly, and the yields of American bonds reached new, multi-year highs. Indices from Europe and Wall Street fell.
Decision week. What about interest rates? in Europe?
The coming week is mainly about the ECB’s decision on interest rates. The institution probably won’t raise them. The inflation rate dropped significantly in September, which was in line with the bank’s expectations. After the last increase, the deposit rate is 4%. and refinancing 4.5%. and this is probably the peak of the entire tightening cycle.
Of course, ECB representatives do not completely rule out further upward steps in their statements. If they thought otherwise, it would be risky with so many unknowns and so many risks. It must be admitted that the fight against inflation is not yet won. However, the vast majority of members of the Council believe that another increase is no longer required when inflation remains within the limits of the institution’s last projection. Another argument against an increase at the upcoming ECB meeting is the fact that a member of the Governing Council, Peter Kazimir, has recently admitted the particular importance of the upcoming projections in December and March.
This suggests that in the future, as before, the ECB will again prefer to make important decisions on the dates of the meetings at which they are presented, and the bank’s latest forecasts will be presented only in December.
Interest rates not only in Europe
The central banks of Canada and Turkey will also decide on interest rates. Among the important macro data, the report on Americans’ spending (Friday) comes to the fore. However, investors will also look to the US GDP result for the third quarter. We will also learn the preliminary estimates of the PMI indices for Europe and the United States (Tuesday), which will provide further information on the condition of these two economic regions and further prospects.
