Today the indices are slightly retreating after gains in recent days. Markets circulated about the meeting between Joe Biden and the head of the Fed, Jerom Powell. Investors are not sure what the true goals of the meeting are and what its possible consequences for the financial markets will be. Will Biden give the green light to the Federal Reserve to help bankers deal with inflation ahead of the fall US mid-term elections?
The WSE ended the day with declines
The indices are now after gigantic sell-offs and it seems that there is no better moment than this to rebound and prove that it was only a correction. At the same time, there is persistent nervousness among investors, which may destabilize bulls’ attempts. Issues related to armed conflict can affect the psychology of market participants, but do not in themselves have a direct impact. The war in Ukraine, though receded in the context of financial markets, influenced many issues, and we still do not know all its implications. Paradoxically, despite powerful sanctions, Russia’s influence on the export of hydrocarbons, especially crude oil, is growing – exports to India, China and unknown destinations have increased. Today the EU announced another, sixth package of sanctions, although their final impact on Russia’s actual condition remains uncertain. In the context of the continued war and the recurring topic of sanctions, nervousness among politicians in Europe may persist for longer and translate into a weaker condition of stock exchange indices. At the same time, the war in Ukraine continues, and Russia is gaining a strategic advantage in the directions of its attack. The potential record revenues for the Russian budget may embolden Putin to implement the ‘maximum plan’ of conquering Kiev. At the same time, the US is likely to allow the export of HIMARS launchers to Ukraine so that it can defend itself against Russian fire, which indicates a long conflict. The agreement on the ‘paper’ embargo on Russian oil announced today by the EU has increased its prices and the stocks of oil companies, which have now dropped below the mark. Despite alarming information from Taiwan, where China has breached the airspace once again during military exercises, defense sector companies are not growing today. General Dynamics and Lockheed Martin are losing their strength. The Big Tech sector is doing well. Apple stocks that try to go above $ 150 per share are gaining ground. Google and Amazon shares are also gaining. Tesla is rebounding almost 20% from the lows in May. The Polish WIG20 did not look good today. We got to know the data from the Polish economy, in which inflation continues to rise, today’s reading showed the level of 13.9%, ie the highest since 1997 and was above analysts’ expectations. We can have an inflation peak only in the third quarter of the year, which potentially still creates room for price increases and leaves the MPC in hawkish moods. Most of the largest companies have retreated today, the stocks of PGE and Orlen are falling, and the banks of PKO and Santander are also losing. The Polish gaming sector, which in its time enjoyed massive growth, is still attracting attention. PlayWay and PCF Group presented their financial results today. Bank Morgan Stanley lowered the target price for CD Projekt’s stock to PLN 85 per share, the company is losing nearly 4% today. Ultimately, the Polish blue chip index ended the session 0.84% negative. Also below the line is the German DAX, which lost 1.2%. Nervous opening in the US did not help the European indexes. The S & P500 is trying to make up for losses at the beginning of trading and is at a negative 0.33%. NASDAQ loses 0.17%. The industrial Dow Jones is the worst performer, losing 0.4%. Due to the Biden-Powell meeting, we can expect increased volatility on the US indices in the evening, the markets will probably expect a statement or information about the joint conference.
Author: Eryk Szmyd, XTB financial market analyst
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