On the stock indices we can observe the continuation of the sideways trend, which is first characterized by local decreases, then by local increases, and finally the market draws neither systematic decreases nor systematic increases. Perhaps this is the so-called distribution phase.
On Thursday morning, futures on major US indices seem to be gaining and making up for earlier losses, all due to the chances of avoiding a US default, i.e. the inability to pay its obligations on time.
Political agreement boosts stock market sentiment
American politicians may be close to an agreement on short-term debt limit increase. Moreover, the ADP report indicated that the U.S. created the most jobs in three months, raising hopes that Friday's NFP report could also provide a positive surprise. By the end of the year, the presidents of the US and China are also expected to meet, which may bring favorable solutions for both countries. Contracts on the S&P 500 seem to be gaining 0.4 percent, and on the technology Nasdaq by 0.6 percent, approaching 15,000 points again.
Commodities take a breather
On Wednesday, unprecedented events may have taken place in the energy commodities market. At one point, natural gas futures in Europe rose by 40 percent, a one-day surge that left some market participants stunned and may have led to statements from Russia moments later. Vladimir Putin declared that Russia would try to solve the energy crisis and stabilize the commodity market. Futures prices for both gas and oil began to fall. WTI crude oil retreated from around $79.5 to $76.5 and US gas contracts fell from $6.5 to $5.8. From the perspective of the whole multi-month trends, the current retreat does not seem large, but markets may wonder if a turning point has already been realized.
Poland raises interest rates
The last time Poland raised interest rates was in 2012, so for many this is a completely new topic. On Wednesday, the MPC decided to raise the reference rate from the record low level of 0.1% to 0.5%, which was a very unexpected move, contradicting earlier statements and announcements about waiting for the November inflation projection. Nevertheless, we can read in the message to the decision that the move may have resulted from an attempt to get ahead of the inflationary spiral and may have been a response to the earlier statement of the Prime Minister, who counted on the reaction of the NBP in connection with high inflation. As a result of the surprising decision, the zloty appreciated, with the EUR/PLN exchange rate falling to 4.54 from 4.62. However, the MPC left a note on possible currency interventions in its communication, so the market may remain unsympathetic to the zloty until this note is deleted.
Daniel Kostecki, Conotoxia Ltd.
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