SummaryLast week, despite the fact that the season on the WSE entered a hot period, it did not bring any major index changes. The largest WIG20 companies lost 0.5%, slightly smaller falls of 0.25% were recorded by small companies. Conversely, the mid-size stocks (mWIG40) gained 0.7%, so the entire WIG lost only 0.25%. The situation in Western Europe was better.

The last week was not fulfilling for the investors. The market sentiment deteriorated after the increase in tension between the US and North Korea. The squabbles between the two sides led to the increase in global risk aversion. As a result, the price of gold went up and Swiss franc and yen appreciated remarkable last week. Thus it is not surprising that major global stock market indices ended the last week in negative territory. During the whole week, the NASDAQ declined by 1.5%, the S&P500 fell by 1.4% and the DJI decreased by 1.1%. In Europe, German DAX went down by 3.4%, French CAC40 shrank by 2.7% and British FTSE250 deteriorated by 2.1%.

Weekly comment MM Prime TFI  - August 7, 2017

Undoubtedly, the FOMC meeting was the most important point in the last week’s economic calendar. In line with the market consensus, the council did not make any changes in the monetary policy. The bank’s statement was much more important issue for investors. According to the document, the reduction of the Fed’s balance would soon start, however, the FOMC paid special attention to the lowering inflation during the last meeting as well. The Federal Reserve is the only hawkish central bank among those the major ones, whereas this aspect has seemed to be discounted, so the market has focused on less dovish rumors from the ECB.

The meeting of the ECB Governing Council was the most important event of the past week. Although the body did not make any changes in the monetary policy, the conference with Mario Draghi aroused a lot of market emotions. The head of the bank probably wanted his speech to be neutral. On the one hand, he said that there were plenty of positive signals from the European economy, but on the other he confirmed the ECB readiness to continue QE. Nevertheless, Mario Draghi acknowledged that the future of QE would be discussed in the autumn as well. These words were interpreted as hawkish ones by the market. Thus euro appreciated against dollar by 1.7% last week.