American stocks performed poorly and pulled global equities down along with them. The Dow Jones Industrial Average declined 1.17% till Thursday to 13,886. The S&P500, which groups the 500 biggest US companies, lost 1.24% to 1,538. On Friday, both indices opened in red at -0.85% and -0.75% respectively. Worse performance of US indices affected Asia, the biggest trading partner of the United States. While both, the Chinese CSI300 and Hong Kong’s Hang Seng ended the week at the same levels they started, the Japanese Nikkei 225 tumbled 3.57% to 16,768.

The retreat of US indices from their all-time high has to do with increasing risk aversion of investors. This week’s macroeconomic publications showed that the American economy is still in deep trouble. Tuesday’s TIC Net Long-Term Transactions in the US showed an outflow of capital in the amount of $69.3B while analysts expected an inflow of $60.0B! Wednesday’s news from the US housing markets made the situation even worse. Housing Starts fell to 1.19M while Building Permits to 1.22M. That is the worst reading in 14 years. The American housing market is far from recovering from the recession it is in.

The Polish Warsaw Stock Exchange followed the global trend established by the US even though macroeconomic news from the Polish economy were rather positive. The Current Account amounted to -637M euros but analysts expected -1340M euros. Average earnings declined to 9.5% against the forecasted 10.7%. CPI was at 2.3% on a yearly basis (expected was 1.9%) being a positive signal for the Polish Złoty but not a good one for equities. The WIG20 started the week at 3,910 to decline all the way to 3,765 on Thursday. It rebounded on Friday to finish the week at 3,830 with a 2.0% weekly loss.

Adam Narczewski