Summary

Undoubtedly, the last Thursday was the most important day of the past week – the market focused on a decision of the ECB, or rather on a conference with Mario Draghi, on the parliamentary elections in the UK and on Donald Trump’s political problems. In line with the market expectations, the Governing Council of the ECB left interest rates unchanged. Nevertheless, the message of the bank was rather dovish, so the market was toned down, because plenty of investors expected some hawkish statements. Meanwhile, in the UK, the party of Theresa May won the parliamentary elections, whereas it lost its majority in the House of Commons. These results should be considered as a failure of the Theresa May’s idea. A lot of concerns on further Brexit’s procedure appeared in the market, but they only adversely affected pound quotations. It is worth adding that there was a first round of the French parliamentary elections on Sunday as well. Emmanuel Macron’s party definitely won. It has been a very good information for the president, which will be able to fulfill his election announcements. After all these results should not affect financial markets. On the other hand, Donald Trump’s political problems have remained actual, although his impeachment has been still unrealistic. This time global major stock market indices were dominated by the red color. During the whole past week, British FTSE250 fell by 1.2%, French CAC40 went down by 0.8% and German DAX deteriorated by 0.1%. In the US, the NASDAQ declined by 1.6%, the S&P500 decreased by 0.3%, while the DJI grew by 0.3%.

In Poland, the stock market was dominated by bulls. During the whole last week, the WIG20 went up by 1.2%, the sWIG80 increased by 0.1%, while the mWIG40 shrank by 0.3%. One of the most active shares was those of Alior which showed a lot of volatility after the resignation of Wojciech Sobieraj from the position of the bank’s chairman. Investors also paid special attention to JSW which thanks to the really good financial results made an early repayment of bonds. Nonetheless, this time the economic calendar was not reach. There was a meeting of the MPC, but council once again did not make any changes in the monetary policy – this will not be changed until the end of the year. The first interest rates raise will probably take place in 2018, which has been recommended by the OECD as well.

In the current week, there will be a lot of macroeconomic data releases from the US and the Euroland. However, the meeting of the FOMC deserves the event of the week name. The market is sure that the Fed will raise interest rates, so a conference with Janet Yellen will be in the spotlight. It is worth remembering that the activity of the Polish investors may be quite lower – Thursday is a day off (the celebration of Corpus Christi).

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The WIG20 defended the psychological barrier of 2,300 pts. and ended the last week at 2,330 pts.. The situation of bulls slightly improved, although the market clearly moved away from the line of a long – term upward trend. A breakthrough of the resistance level at 2,400 pts. will probably start a new upward wave. The RSI oscillator remained neutral, whereas the volume of trade was solid which may have been another confirmation of bulls’ strength. However, so far, the market has continued a short – term consolidation.

Graph 2: PCC Rokita daily. Source: Stooq

This time we chose PCC Rokita as a company of the week. During the last five trading days, its share price increased by 5.1%. Technical situation of the company is very interesting. A graph shows a very clear upward trend interrupted by stabilization periods. Last week, the stock price rebounded from the important support level at PLN 85. Moreover, the volume of trade increased and the MACD oscillator indicated a buy signal. As a result, further movements towards the resistance level at PLN 96 cannot be ruled out. A breakthrough of this barrier will probably be a signal to start a new upward wave. Otherwise history may repeat – the share price will confirm a consolidation.

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

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