Summary

It was another week in which global financial markets moved towards south – the DJI decreased by 1.4%, the S&P500 dropped by 0.8% and the NASDAQ went down by 0.4%. In Europe, declines were much more severe. French CAC40 fell by 4.8%, British FTSE250 decreased by 3.6% and German DAX went down by 3.4%. Market sentiment was really poor. Investors expected that the new crisis would come. The list of factors which caused the greatest concerns was long. Firstly, Chinese economy slid into recession. Moreover, a drop of oil price led to a tense situation in other emerging markets. It is worth remembering that the low price of black gold adversely affected American oil producers as well. In addition, investors worried about a deteriorating state of the banking sector, especially in Europe. Furthermore, some economic data from the euro zone failed. The Sentix index dropped to 6.0 pts. in February from 9.6 pts. in January. The GDP growth for the fourth quarter of 2015 stood at 1.5% y/y vs 1.55% expected. What is more, an industrial production decreased by 1.3% y/y in January (expected growth of 1.0%). In the US, investors paid their attention to the Janet Yellen’s speech. She said that despite the financial markets’ unease and worries about global growth, Fed was going to raise interest rates in a gradual manner. Nevertheless, the market interpretation was a dovish one. There was also a release of American retail sales. In the mouth of January it increased by 3.4% y/y.

The WSE was dominated by bears as well. The WIG20 went down by 1.4%, mWIG40 fell by 3.4% and the sWIG80 declined by 1.1%. The global market sentiment, which was very poor, did not help Polish stock market to grow. Nevertheless, investors learnt some new economic data. The GDP growth in the fourth quarter of 2015 stood at 3.6% y/y vs 3.8% expected. In addition, there was a publication of the CPI. Surprisingly, it decreased by 0.7% y/y. The analysts expected the decline of 0.6%.

Chinese investors returned from the weeklong Lunar New Year holiday. On the other hand, on Monday there is a President’s Day in the US. Thus, American stock markets will be closed. In the current week, it is worth paying attention to economic data releases from China and Japan. Furthermore, investors will learn the dynamic of the US industrial production and the inflation. One of the most important week’s events will be Mario Draghi’s public appearance. In Poland, there will be a release of the industrial production.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

This time the index of the largest companies ended the week in the red and it stood at 1,765 pts. However, it should be noted that it was third consecutive week in which the WIG20 tested the resistance of 1783 pts. Therefore, it seemed that the market sentiment improved. Perhaps, if the global market tone had not been so poor, the WIG20 would have moved towards north. The breakthrough of the next resistance will be a signal for further growths towards the line of accelerated downward trend. Moreover, then the index will probably approach the psychological level of 1,800 pts. The RSI oscillator was neutral and did not indicate any signals.

Graph 2: Sygnity daily. Source: Stooq.

Sygnity deserved the company of the week name. Its share price increased steadily since the beginning of the year. This week the course rose by 7.6%. Moreover, it will probably test the resistance of PLN 8.6. Then, the share price will likely move towards the line of long term downward trend. Thus, a trend reversal can be expected. On the other hand, the RSI oscillator approached the 70 pts. mark and it may indicate a sell signal soon. Nevertheless, it seems that the bulls will dominate and a possible signal will probably bring a slight correction.

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

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