Summary

The last week of June was not successful for the stock markets. During the whole past week, German DAX deteriorated by 3.2%, French CAC40 fell by 2.8% and British FTSE250 went down by 1.8%. In the US, the NASDAQ declined by 2%, the S&P500 decreased by 0.6% and the DJI shrank by 0.2%. This time special attention should be paid to the latest macroeconomic data releases. The readings from the US economy ended run of bad luck and surprised investors positively. The revision of the annualized GDP growth rate stood at 1.4% vs 1.2% expected. In addition, the Chicago PMI significantly exceeded the market consensus – 65.7 pts. vs 58 pts.. The macroeconomic data from the Euroland did not fail as well, especially the confidence indices which have been growing systematically. What is more, the release of the German Ifo index amounted to 115.1 pts. – it was the highest value in history. Nevertheless, the market focused on the Portuguese Sintra – there was a conference with the heads of major central banks in Europe. Neutral speeches of Mario Draghi was quite hawkish in the eyes of investors in spite of the subsequent ECB’s announcements that the market had been overly optimistic about the words of the bank’s president. As a result, dollar depreciated against euro by 2% last week. It should be also noted that the price of crude oil rebounded by more than 7% last week. However, it seemed that it was only a correction, especially since the fundamentals did not change.

In Poland, during the whole past week, the WIG20 went down by 0.2%, whereas the mWIG40 increased by 0.4% and the sWIG80 rose by 0.5%. A holiday season on the WSE has started – the volume of trade has shrunk. Nevertheless, the last week was quite eventful. CI Games published its new strategy which focuses on smaller but more frequent productions of games. The EBRD sold half of its shares in Azoty Group and PKN Orlen announced the payment of a dividend – the highest in company’s history. Moreover, Maxcom launched its IPO on the WSE last week. It is worth paying attention to the latest data from the Polish economy as well. The unemployment rate dropped from 7.7% in April to 7.4% in May, while the CPI stood at 1.5% y/y vs 1.7% projected.

This week the latest macroeconomic data releases from the US and the Euroland will be in the spotlight, especially the publications of the PMIs and the American payrolls. In addition, investors will learn the minutes from the last meetings of the FOMC and the Governing Council of the ECB. In Poland, the MPC will make a decision on the interest rates, but special attention will be paid to Donald Trump who will visit the country for the first time. On Tuesday, the US stock markets will be closed - Independence Day.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last days did not bring any significant changes – the index of the largest polish companies continued a consolidation and oscillated around the psychological level of 2,300 pts.. Thus, the WIG20 ended a Friday’s trading session at 2,299 pts.. The technical situation has remained unchanged since mid – May when a correction phase pushed the index down to a new short - term sideways trend. Nonetheless, in a broader horizon, a potential end of the consolidation will not be a signal of a trend reversal, as the key resistance and support levels stand at 2,420 pts. and around 2,170 pts.

Graph 2: Torpol daily. Source: Stooq

We chose Torpol as a company of the past week - its share price grew by 7.2%. Lately, the stock price was in a correction phase. In the past week the market has changed a direction of current movements, although it was not able to break the level of PLN 13. However, the moving averages formed a golden cross pattern – a strong buy signal. The technical situation supports bulls, whereas the overbought RSI oscillator and the low volume of trade may raise some doubts about the real strength of demand. The breakthrough of the resistance level at PLN 13.8 should be considered as a clear buy signal, which will probably open the way to a new upward wave.

Authors: MM Prime TFI S.A. Investment Management Team

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