Summary

The first part of the last week was very smooth on the financial markets. Investors was waiting for Thursday’s decision of the ECB’s Governing Council on the interest rates. The market did not expect any changes in the monetary policy, whereas investors hoped that during the conference Mario Draghi would announce an extension of the QE. Meanwhile, the president of the ECB did not declare any dovish changes in the near future. As a result, major global stock indices started do decrease. What is more, they continued to decline on Friday as well. During the whole week, French CAC40 went down by 1.1%, German DAX deteriorated by 1% and British FTSE250 fell by 0.7%. In the US, the NASDAQ and the S&P500 declined by 2.4% and the DJI decreased by 2.2%. It is also worth paying attention to the latest macroeconomic data, especially from the US. The readings failed once again. The ISM non – manufacturing index stood at 51.4 pts. vs 55.2 pts. expected. In addition, the release of the wholesale sale growth rate disappointed investors (-1.9%y/y). As a result, the probability of the Fed’s interest rates raise was estimated by the market at 25%. Now, there are plenty of indications that the FOMC will make this decision in December. In the Eurozone, the GDP growth for the second quarter of 2016 amounted to 1.6% y/y. The result was in line with projections. Nevertheless, the services PMI turned out to be slightly lower than market consensus – 52.8 pts. against 53.1 pts.

Last week was not successful for the index of the largest Polish companies. It went down by 0.8%. In contrast, the small and medium – sized companies did not fail. During the whole week, the mWIG40 took off by 1.2% and the sWIG80 rose by 0.3%. Investors were looking forward to the decision of Moody’s concerning the Polish credit rating. It was very probable that the agency would decide to cut the note of the Polish creditworthiness. Meanwhile, as it was in January, Moody’s did not publish the review of the credit ratings for Poland. However, it did not significantly affect quotations of the Polish zloty. Perhaps, the market will fully discount this information at the beginning of the current week. Moreover, the MPC meeting was ended on Wednesday. Nonetheless, it did not arouse plenty of market emotions – the interest rates remained unchanged.

In the current week it is worth paying attention to the releases of the US data on the retail sales, the manufacturing production and the inflation. In Euroland, there will be readings of the ZEW indices, the dynamic of the manufacturing production and the CPI. Data on inflation will be presented by Poland as well. Furthermore, the CSO will publish the dynamic of the wages. The decisions on the interest rates will be made by the Bank of England and the Swiss National Bank.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The beginning of the last week was very successful for the blue – chips. The WIG20 managed to break the level of 1,800 pts.. Nonetheless, in the second part of the past week the market sentiment was bearish. Thus, the index ended Friday’s session at 1,754 pts.. The RSI oscillator remained neutral, whereas the moving averages formed the cross of death pattern. The nearest support level stands at 1749 pts.. The breakthrough will probably bring further declines towards the level of 1,700 pts. Otherwise, the next objective for the market will be the resistance level at 1,800 pts.

Graph 2: Wielton daily. Source: Stooq

Last week was very fulfilling for the investors who had in their portfolios the shares of Wielton. During the whole week, the share price of the company increased by 13.7%. In the current year the course has been in an upward trend. What is more, the share price reached its historical peak (PLN 11.38) on Thursday. Certainly, very good financial performance of Wielton in the first half of 2016 helped its share price to grow. On the other hand, the RSI oscillator indicated overbought. A correction cannot be ruled out in the near future. Subsequently, the course may start the third upward wave.

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

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