Summary

Last week, the performance of major global stock market indices was diversified. During the whole week, the NASDAQ fell by 0.6%, the S&P500 went down by 0.3% and the DJI did not see any changes. In Europe, British FTSE250 increased 1.4%, French CAC40 soared by 0.3%, while German DAX deteriorated by 0.7%. This time the minutes from the last meetings of the FOMC and the ECB Governing Council were in the spotlight. The documents dispelled all doubts in the market. The Fed is going to raise interest rates two more times in 2017 and it does not expect that the announced economic reforms will influence the further shape of the monetary policy. It should be also noted that the work on changes in the tax system may take a long time, as the US Government has not been able to work out a common position. Meanwhile, the ECB does not intend to raise interest rates until the end of QE. It was confirmed by the minutes from the last meeting of the ECB Governing Council, as well as by Mario Draghi during the conference last week. There was also Trump – Xi meeting last week. This did not bring any specific provisions, whereas both presidents did not hide their satisfaction from the talks. It is worth paying attention to the latest macroeconomic data releases as well. The readings of the PMIs for the Euroland and the US did not fail, however, data from the American labor market turned out to be quite disappointing. On the one hand the unemployment rate dropped from 4.7% to 4.5%, but on the other the non – farm payrolls stood at 98K vs 180K projected.

The Polish stock market indices ended the last week in positive territory. During the whole week, the WIG20 increased by 3.3%, the mWIG40 grew by 0.6% and the sWIG80 took off by 0.9%. Investors learnt the manufacturing PMI in the past week. The index stood at 53.5 pts. vs 54.6 pts. expected. After all, the result was still solid and it confirmed a strong condition of the Polish industry. In addition, there was the MPC meeting last week. In line with the market consensus, the interest rates remained unchanged. During the conference Adam Glapinski confirmed the previous projections of the council and reiterated that the MPC was going to continue the policy of the interest rates stabilization in 2017 and maybe even in 2018.

Holy Week will bring a lot of macroeconomic data releases. There will be publications of the Sentix index and the dynamic of the manufacturing production in the Euroland. Investors will also learn the American data on the inflation and the retail sales. Moreover, data on the dynamic of prices will be published in Poland as well. It is worth remembering that many stock markets will be closed on Good Friday, for instance, in Poland, Germany and the US.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The index of the largest Polish companies was still in a consolidation. It meant that the market continued a correction. However, the last week was very successful for blue chips, so the WIG20 ended Friday’s trading session at 2,248 pts.. Furthermore, the index managed to defend a support level at 2,175 pts. (23.6% Fibonacci retracement). It is worth noting that the volume of trade shrunk considerably. It is possible that the scale of correction will not be significant. A potential breakthrough of the resistance level at 2,300 pts. should be considered as a buy signal and the beginning of another upward wave.

Graph 2: JSW daily. Source: Stooq

This time we chose JSW as a company of the week. During the last five trading days, its share price rose by 19.4%. After last year’s rally, which was caused by the boom in the coal market, the stock price of JSW caught a slight shortness of breath. As a result, it has been moving in a sideways trend. Recent growths were a result of further increases in coal prices. However, the share price did not break the upper limit of the consolidation. Thus, the probability of declines seemed to be high, whereas much would depend on the future situation in the coal market. The nearest support level stands at PLN 60.

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