The fire is extinguished, we are in risk-on mode. The Warsaw Stock Exchange Index is the highest in history
Investors on the Warsaw Stock Exchange saw a real explosion of optimism. Information about the two-week ceasefire in the US-Iran conflict and the unblocking of the strategic Strait of Hormuz caused euphoria and risk-on appetite, which pushed the main WSE index to levels never seen before in history.
Euphoria gripped financial markets after an overnight halt to hostilities in the Persian Gulf was agreed and promises to open the Strait of Hormuz to shipping, even though hours earlier the US president had threatened to end the Iranian civilization. Oil prices fell by almost 15%, giving hope for an end to the fuel crisis. The largest increases were recorded on stock exchanges in Asia, because Japan, Korea and Vietnam are most dependent on oil imports from the Persian Gulf. Indices in Europe followed the Nikkei 225 and KOSPI. The WSE contributed as best it could to global risk-on.
During the day, the Polish blue chip index gained over 4% and reached the level of 3,559.04 points. which means breaking the previous (Tuesday) bull market peak. At the end of the day, the WIG20 index increased by 3.43%, reaching 3,533.95 points. The broad market did great – the WIG index gained 3.31%, and during the day it also gained around 4%, reaching a new historical record of 129,853.22 points. Medium-sized companies also looked impressive: mWIG40 grew by 3.32%, and sWIG80 gained 1.49%. The turnover on the broad market amounted to over PLN 3.9 billion, of which PLN 3.26 billion concerned WIG20 companies.
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Analysts' comments on the session
“Wednesday in financial markets brings a significant increase in investor appetite for risky assets, which is related to the de-escalation of the war in the Persian Gulf,” Tomasz Marek, financial markets analyst at PKO BP, told PAP Biznes. In his opinion, the markets are optimistic about the ceasefire and the possibility of unblocking the Strait of Hormuz, but a lot depends on the course of the negotiations, which are scheduled to start next Friday.
“What was strong in recent weeks is behaving weaker and vice versa. The question is whether this two-week truce will be maintained,” Sobiesław Kozłowski, director of the investment advisory department at Ipopema Private Investments, told PAP Biznes. “I have the impression that the market will gradually return to fundamentals. Next week the earnings season begins in the United States, so it will be a 'check' for the markets. There will be questions about the assessment of the impact of oil prices on costs and results. The market will be able to gain a fundamental understanding of where the fair value is,” Kozłowski added.
Europe and the USA in joy
At the close of trading at Książęca Street, there was a boom in the West: the German DAX was gaining 4.7%, the French CAC40 was growing by 4.4%, and the British FTSE100 was increasing by 2.4%. There were also gains overseas – the S&P500 gained by 2.1%, and the technological Nasdaq Composite went up by 2.6%.
Banks and KGHM as growth engines
There was almost universal joy in the country, with a few exceptions. KGHM (9.89%) became the growth leader in WIG20, benefiting from improved global sentiment and increases in copper and silver prices. The financial sector performed phenomenally – the WIG-Banki sub-index (6.37%) set historical highs. The leaders in this group were mBank (9.41%), Alior Bank (7.32%), PKO BP (5.56%), Pekao (6.64%) from WIG20 and Millennium (8.93%) from MIWG40. Strong demand was also visible in the construction industry, where Budimex gained 5.79%, Trakcja increased by 7.91%, Polimex gained 8.96% and Erbud 6.42%.
However, political announcements regarding the energy sector overshadowed the session. Orlen fell by 2.84%, which, apart from falling oil prices, may have been influenced by information about work on a tax on excess profits. Mining companies, which had previously benefited from rising prices of energy raw materials following expensive crude oil, were also under pressure. The JSW price dropped by 11.08%, and Bogdanka lost as much as 16.76%. These companies gained over the previous month. From March 2 to April 7, the JSW price increased by 28%, and the Bogdanka price increased by 84%
A spectacular rebound in tourism
There was just as much going on on the broader market. Pure Biologics (13.74%) became the leader of growth on the entire stock exchange after information about negotiations regarding a new technology platform. The prices of tourism industry companies most depreciated by the Middle East conflict took a breather. Shares of the tourist operator Rainbow Tours increased by 11.45%, Enter Air, an aircraft charter company, gained 6.76%. In turn, Auto Partner (6.98%) gained thanks to excellent revenue estimates for March. On the other side of the barricade was Ailleron (-7.79%), after information that the investor had suspended talks regarding Software Mind.
A week after the official debut, the first transactions in Kombinat Hemp shares were concluded. The price first gained 1,150% and then grew by 1,380%. At the end of the session, the increase was 540%.
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