Afternoon analysis 13.11.2015

, author:

Marcin Lipka

The GDP of the eurozone appeared to be weaker than expected. In the second part of Friday's session, the aversion towards risk continues to be strong. The zloty increases its overvalue from this morning.

The European Central Bank received new arguments for easing the monetary policy. After yesterday's publications of weak industrial production data (minus 0.3% against the expected minus 0.1%), today the market received a series of GDP reports. They showed an intensification in the disadvantageous tendencies. Impact of the global economy's slowdown on the foreign trade is especially visible.

An increase in the eurozone GDP was 0.3% in quarter on quarter relation. This result is weaker than market expectations, which were on the level of 0.4%. A certain consolation can be the fact that data for the past period was reviewed upwards. According to the latest estimations, in the second quarter the eurozone's economy developed at a pace of 0.4%.

The German economy slowed down from 0.4% to 0.3% in quarter on quarter relation. This result was expected by analysts. Comments about the data suggest that an increase was supported by household consumption and government expenses. The fact that foreign trade had a negative impact on the pace of GDP growth is of great significance. It is due to the pace of export being slower than of import.

The GDP of France accelerated to plus 0.3%, against stagnation in the second quarter. In year on year relation, growth accelerated to 1.2%, which was a better result than expected. This is a result of an increase in household consumption and the contribution of change in supplies. Just like the German economy, the French economy experienced a negative contribution of foreign trade in growth. Thus, the structure of the French growth remains disadvantageous. On the other hand, the data from Holland, Italy and Portugal (the country is in stagnation) were worse than analysts expected.

Weak data regarding sales

Data about retail sales in the United States did not manage to face the analysts' expectations. Sales in general increased by 0.1%, against the 0.3% prognosis. On the other hand, sales, with the exclusion of transport, increased by 0.2% against the 0.4% prognosis. Also, the report about producers' inflation was weaker than expected, which shows that the Federal Reserve is receding from fulfilling its target.

It is difficult to expect that today's publications will change the Fed's plans regarding the monetary tightening in December. As a result, after a moment of hesitation the EUR/USD pair returned to depreciations. However, the rate remains above the level of 1.07.

Zloty under pressure

News from China increase the aversion towards risk. Today, the Chinese supervision informed that the value of endangered credit increased to 628 billion dollars and the dynamics of banks' profits from January to September decreased to 2% from 13% last year. According to Bloomberg information, the participation of endangered credits in wallets of the Chinese banks is 5.4%, when we consider credit of special purpose. The official data speak of 1.59%.

This is another example of the many Chinese problems. In today's data from the European economy we can see the impact of this factor on the deterioration of the foreign trade results. This means that the Chinese problems have a negative influence on the global economy. As a result, the negative sentiment intensifies on the wide market.

An increase in the Polish GDP accelerated from 3.3% in the second quarter to 3.4%. This result is better than the market's consensus. This means that the economy accelerated in relation to the past quarter, while the current pace of development was expected. The GUS did not present the data about the growth structure, but it was probably supported by household consumption and foreign trade.

Other data was also better than expected. Consumers' inflation was minus 0.7% against the 0.7% in the initial reading. Data about foreign trade was also positive because the surplus increased to 87 million euros against 188 million euros in the past month. On the other hand, the balance of the current account was minus 959 million euros, against the 400 million euro prognosis.

The intensification of aversion towards risk causes negative pressure on the zloty. This factor decreases the positive impact of external factors, which are better than expected data and limitation of political risk.

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without the written permission from Sp. z o.o is prohibited.

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