Summary

Last week, major global stock market indices were dominated by the red color, however, the scale of declines was really small. During the whole week, the DJI fell by 0.5%, the S&P500 went down by 0.4% and the NASDAQ declined by 0.2%. In Europe, German DAX decreased by 0.5%, French CAC40 deteriorated by a symbolic 0.04%, while British FTSE250 rose by 0.4%. This time the ECB Governing Council was in the spotlight. The council did not change the shape of the European monetary policy. After all, during the conference the attitude of Mario Draghi was a little less dovish than usual. As a result, euro appreciated against dollar. It was quite surprising movement, because according to the market consensus, in the current week the FOMC will probably raise the interest rates. The potential raise will be the first of three scheduled for 2017. Moreover, investors learnt the American payrolls last week. The data did not fail once again. The unemployment rate fell from 4.8% to 4.7%, the non – farm payrolls stood at 235K vs 190K expected, while the dynamic of the average hourly earnings amounted to 0.2% m/m vs 0.3% projected. It is worth paying attention to the Chinese balance of trade as well. The dynamic of export stood at -1.3% y/y, whereas the import growth rate amounted to 38.1% y/y. Certainly, it was an effect of rising commodity prices. Nonetheless, this data may have been a confirmation that the Chinese economy has started to recover.

The Polish stock market indices also ended the last week in negative territory. During the whole week, the WIG20 went down by 1.5%, the mWIG40 fell by 2.6% and the sWIG80 declined by 0.8%. This time the MPC meeting was the event of the week. In line with the market consensus, the interest rates remained unchanged. However, during the conference Adam Glapinski dispelled market’s hopes. The NBP projections were revised, whereas the attitude of the MPC did not change – the policy of the interest rates stabilization will be probably continuing in 2017 and even possibly in 2018. Furthermore, it is worth noting that the unemployment rate stood at 8.5% - it was the lowest February’s reading for 26 years. Last week, apart from the share prices of Polimex, PBG and Rafako which aroused a lot of market emotions, the stock price of Briju surprised investors negatively. During the whole week, it decreased by 60%.

In the current week, besides the FOMC meeting, it is worth paying attention to the numerous macroeconomic data readings from the US, the Euroland and Poland. In addition, investors will learn a lot of financial statements of companies listed on the WSE. Special attention should be paid to the financial results of blue chips - they will be published by KGHM, PZU, Tauron, PKN Orlen, Eurocash, Asseco Poland and Cyfrowy Polsat.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, the index of the largest Polish companies moved towards south, so it ended Friday’s trading session at 2,200 pts.. It is worth noting that the level represented a significant barrier. A potential breakthrough should be considered as a sell signal. Furthermore, it may be a confirmation of a double top pattern and a beginning of a correction. In this case, the nearest support level stands at 2,100 pts.. Otherwise, the next target for the market will be a local peak at 2,270 pts.

Graph 2: Alior Bank daily. Source: Stooq

This time attention should be paid to Alior Bank, whose share price grew by 5.3% last week. The stock price has been moving in an upward trend since December 2016, when the moving averages formed a golden cross pattern. The publication of the financial statement for 2016 turned out to be an incentive to further growths. The results exceeded market expectations. As a result, the share price approached the resistance level at PLN 70. Nonetheless, if the stock price breaks the barrier, the market will have to cope with the next resistance levels at PLN 72 and PLN 75. After all, technical oscillators were not overbought, so the probability of further increases seemed to be relatively high.

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

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