Bad news keep flowing from the United States. No surprise! Again from the housing market. This time pending home sales declined by 2.6% while analysts expected just a 0.7% drop. Both the Dow Jones and S&P 500 tumbled but since Wednesday the regained momentum. What made indices shoot up was the speech given by Ben Bernanke, Fed’s Chairman, at the Women in Housing and Finance and the Exchequer Club conference in Washington. Bernanke said the Fed will disregard inflation for right now and will focus on the economic situation of the U.S. Such words raised expectations that the FOMC will cut interest rates by 50 basis points from the current 4.25%. Those were great news for stock markets. The Dow Jones reached 12,900 by Thursday (to open in red on Friday at 12,700) while the S&P 500 gained to 1,428 (opened in red on Friday at 1,408).

Global stock indices kept loosing throughout the course of the week. Surprisingly, they did not rebound after U.S indices did. The major Asian index, the Japanese Nikkei 225, declined from 14,550 to 14,255. European stock markets also performed poorly. German’s DAX tumbled from 7,850 to 7,700 while the French CAC 40 declined from 5,470 to 5,360.

The Polish WIG 20 remains in the decreasing trend since the beginning of the year. This past week even rebounding U.S indices did not help the Warsaw Stock Exchange. The major Polish index lost 4.5% to 3,245. breaking an important support level at 3,250. Next week will be crucial for the WIG 20. Investors are anxious to hear news about inflation in the U.S and depending how American markets react to the publications, the Polish index should follow them.  

Adam Narczewski