Summary:
- Polish equity index bounces off the key support, economic foundations remain firm
- South African rand being negatively affected by politics
- Copper prices close to their crucial support
The Polish stock market (WIG 20) has underperformed its peers in Europe despite still solid economic foundations. The European elections there were won by the ruling Law and Justice which, in our view, limits space for further steps toward more expansionary fiscal policy until the autumn when general elections take place. Moreover, interest rates are unlikely to be increased in the coming months despite higher inflation of late. Therefore, equities could be still viewed as attractive. Technically the W20 already hit the lower boundary of the upward channel which could constitute an interesting place to consider entering a long position. If so, a possible target could be looked for at around 2420 points. Source: xStation5
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The South African rand is under selling pressure today due to political issues. Namely there is a possibility that David Mabuza may be re-appointed as deputy president. Let us note that in the past Mabuza was linked to some scandals when he served as PM of the eastern Mpumalanga province, therefore markets think that his appointment could constitute an obstacle in cracking down on corruption in the African country. The final decision has yet to be taken, hence if these rumours turn out to be false, one may suppose that the rand will strengthen in the aftermath. From a technical standpoint the USDZAR is eyeing the important resistance nearby 14.7 which could be a hard nut to crack for buyers. The first more notable support is placed at 13.6 and it coincides with the 50% retracement of the latest big upward move. Source: xStation5
Copper prices have been under pressure recently mainly due to renewed trade tensions between the US and China. On top of that, the data we got for April from the world’s second largest economy disappointed, to say the least. It would mean that Chinese demand for copper will remain moderate, limiting a long-lived price increase. On the other hand, there is a possibility that some supply disruptions in South America will drive prices higher and this view is also underpinned by price action. Copper prices are closing the crucial support in the vicinity of $5850. If bulls are able to stop sellers, it could give rise to a corrective move back toward $6600. Source: xStation5
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