Recessionary start to Thursday's session

The beginning of Thursday's session on world markets is marked by recession. GDP data for the fourth quarter indicated that both Japan and the United Kingdom struggled with a technical contraction of the economy in the second half of last year, and this has a huge impact on how investors estimate future monetary decisions. BoJ and BoE.

Ball and chain for Yen

The Japanese economy unexpectedly fell into recession after... CBA declined in the second quarter due to anemic domestic demand. Gross domestic product lost 0,4% on an annual basis in the fourth quarter of last year at growth expectations of 1,1%. This news for the yen and the BoJ may be a real pain in the neck in the long term, as the market's current expectations for an exit from the negative interest rate zone may now be negated. by Japan's weakening economy.

The UK also entered a mild recession in the second half of 2023. Gross domestic product fell 0,3% in the fourth quarter, more than the 0,1% decline economists had forecast. While the economy still grew by 0,1% for the full year, this was the slowest annual growth in gross domestic product the UK has seen since 2009, excluding the first year of the pandemic.

Slight declines in the Polish zloty

In the second part of the day, investors' attention will move overseas, where, before the opening of the stock market, data on retail sales and industrial production for January, as well as regional indicators for February will be published. The most important report will undoubtedly be retail sales, as recent data has shown that the American consumer is in very good shape. However, January data is expected to show a decline on a monthly basis and a smaller increase on a year-to-date basis.

The Japanese yen is performing particularly well in the broad market. The British pound and the American dollar experience greater declines. The Polish zloty is recording slight declines this morning due to the lower than expected CPI reading for January. The disinflation process in Poland is progressing, but a barrier in its translation into the level of interest rates may be the recent hawkish comments from President Glapiński of the MPC. One thing is certain, real interest rates are positive for the first time in five years, which indicates that the monetary environment in Poland is indeed "tight". We will currently pay PLN 4,0450 for the dollar, PLN 4,3442 for the euro, PLN 4,5819 for the franc, and PLN 5,0813 for the pound.

Source: Mateusz Czyżkowski, XTB