Inflation in Poland drops sharply, Europe celebrates gains
Good mood prevailed from the morning across the rest of the Old Continent.
European markets saw several indices gaining more than 1%. Among them were the German DAX (+1.50%) and the Italian FTSE MIB (+1.01%).
On the domestic scene, attention focused mainly on the preliminary reading of June inflation, which pleasantly surprised.
According to GUS estimates, CPI inflation fell to 2.5% year‑on‑year (consensus: 2.8% year‑on‑year). The main positive surprises were the decline in food prices and the fact that the latest shock in energy commodity prices did not spread widely across the entire economy.
Taking into account the return of the 23% VAT rate on energy, CPI inflation in the coming months should stay in the 2.5–3.0% year‑on‑year range.
This level of inflation gives the RPP comfort to continue a “wait and see” policy. In our view, the next move in interest rates will be a cut, although for now we will likely have to wait until next year.
Wall Street ends its best quarter in 6 years
Meanwhile, across the ocean, investors also finished a very successful quarter with solid gains. The S&P 500 added 0.79%, while the Nasdaq rose 1.68%. For both indices, it was the best quarter in six years.
It is worth noting that the S&P 500’s performance is largely driven by phenomenal returns from companies linked to the semiconductor and AI sectors. A potential correction that may come in the upcoming quarter could take on a rotational character.
Within the S&P 500 components, a large group of companies has still only achieved single‑digit returns since the beginning of the year.
In our view, as long as U.S. macro data continue to pleasantly surprise, any corrective moves should mainly be sectoral rather than “overall.” At the time of writing, Asian markets are already welcoming the third quarter in good spirits.
The Japanese Nikkei gains almost 1%, while the Indian Sensex gains about 0.5%. The “hottest index of the first half‑year” – the Korean KOSPI – stands out negatively at -1.5%.
Futures on the most important European indices indicate a slightly negative opening. We assume that today investors will already be waiting for U.S. labor market data, which will be released on Thursday.
Therefore, we do not expect particularly high volatility during Wednesday’s session.
