Summary

Last week, the American stock indices saw slight changes – the NASDAQ and the S&P500 rose by 0.1%, while the DJI fell by 0.1%. Moreover, dollar once more depreciated against euro. It should be emphasized that the latest macroeconomic data readings from the US economy ought to have supported local assets. High values of the manufacturing ISM index (56 pts.) and the PMI (55 pts.) confirmed optimistic moods in that sector. In addition, the payrolls exceeded market expectations. Despite the growth in the unemployment rate to 4.8%, the non – farm payrolls stood at 227K vs 175K projected. Furthermore, there was a meeting of the FOMC last week. In line with market consensus, the council did not make any changes in the monetary policy. Nonetheless, the public appearance of Janet Yellen turned out to be quite dovish. Everything pointed to the fact that Donald Trump was the source of uncertainty. The new president of the US made his decisions quickly, whereas so far, they were not related to the announced fiscal stimulus package. It is worth paying attention to the latest readings from the EU economy as well, because they did not fail. The releases of the confidence indices, the unemployment rate (9.6%), the GDP growth for the fourth quarter of 2016 (1.8% y/y) and the manufacturing PMI (55.2 pts.) were higher than projections. During the whole week, British FTSE250 rose by 1.2%, German DAX went down by 1.4% and French CAC40 declined by 0.3%.

After a very successful week, the Polish stock indices caught a slight shortness of breath. During the whole week, the WIG20 decreased by 0.4%, the mWIG40 fell by 0.9%, while the sWIG80 soared by 0.2%. Last week, the preliminary estimate of the GDP growth for 2016 did not support the market sentiment. It amounted to only 2.8% y/y. Moreover, the latest data from the Ministry of Finance failed quite unexpectedly. A December budget had an adversely impact on annual data – it turned out that efforts for the sealing of the tax system did not bring expected results. Thus, the budget deficit for 2016 would probably be the highest in history. After all, recent readings of the PMIs, dynamics of the retail sales and the manufacturing production indicated that the Polish economy started its expansion. Moreover, the earnings season of companies listed on the WSE begun. The financial statement for the fourth quarter of 2016 was published by ING. The financial performance was better than those of the same period in 2015, whereas slightly worse than expected.

In the current week, it is worth paying attention to the latest, although much less numerous, macroeconomic data from the US and the Euroland. After all, investors will focus on the earnings season. What is more, there will be a meeting of the Polish MPC which will make a decision on the interest rates.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The past week brought a continuation of the WIG20 correction. However, it took the form of a consolidation. As a result, the blue – chip index ended Friday’s trading session at 2,076 pts.. It should be noted that the volume of trade shrank and the RSI oscillator remained neutral. Perhaps, the market was ready for the next test of the resistance level at 2,100 pts.. Potential breakthrough will be a signal for further growths towards the 2,200 pts. mark. Otherwise, a return to the psychological level of 2,000 pts. cannot be ruled out.

Graph 2: Awbud daily. Source: Stooq

This time we chose Awbud as a company of the week. During the last five trading days, its share price grew by 16.4%. The stock price has moved in a sideways trend since October 2016. After it had managed to defend a psychological level at PLN 5 twice, it started to move towards north dynamically. Thus, a resistance level at PLN 6.5 was slightly broken. Furthermore, moving averages formed a golden cross pattern and the volume of trade increased significantly. There were plenty of indications that the share price may continue its rally. However, if the market does not defend the support of PLN 6.5, the stock price will probably return to the horizontal trend.

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

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