Summary

A global bull market was going on and many major stock market indices reached their historical peaks last week. During the last five trading days, the DJI increased by 0.4%, while the S&P500 and the NASDAQ rose by 0.2%. In Europe, the British FTSE250 grew by 0.5%, the German DAX soared by 0.3%, whereas the French CAC40 declined by 0.2%. The past week was rather smooth. The economic calendar was not rich. Moreover, a diplomatic solution of the Catalonia’s government concerning the independence of the region did not lead to the increase of the political risk. Investors learnt the minutes from the last meeting of the FOMC last week. The document did not contain any surprising news. Nevertheless, the council was divided to the path of inflation projections. This may be an important aspect influencing further monetary policy of the Fed. It should be added that the September’s reading of the CPI stood at 2.2% y/y. The result was in line with the market consensus. In addition, investors learnt the dynamic of the American retail sales – 1.6% m/m vs 1.7% expected. It is worth paying attention to the macroeconomic data from the Euroland as well. The Sentix index (29.7 pts.) and the manufacturing production growth rate (1.4% m/m) exceeded market projections. The economic condition of the Eurozone has been getting stronger. This has been noticed by the EBC Governing Council which will probably begin the process of the monetary policy normalization.

The market continued growths on the WSE as well. However, small and medium-sized companies did not give investors plenty of reasons to be glad. During the whole past week, the WIG20 increased by 2%, the mWIG40 went up by 0.4%, while the sWIG80 deteriorated by 0.5%. Special attention should be paid to the surprising announcement of Budimex. The company informed the market that its financial results for the third quarter of 2017 were significantly higher than projections. On the other hand, the market capitalization of Selvita dropped remarkable last week. The company suspended clinical trials one of its medicines. The information hit the share prices of other biotech companies listed on the WSE. Investors also learnt the final reading of the September’s CPI. The result of 2.2% y/y was in line with the market consensus. Furthermore, the market focused on the information related to the government work on the presidential bill on loans denominated in Swiss francs and the bill concerning the ban on trade on Sundays. Both projects have been very important for many companies listed on the WSE.

This week, investors will focus on the latest macroeconomic data from the US, the Euroland and China. Nonetheless, there will be a lot of economic data releases from Poland as well. What is more, the earnings season for the third quarter of 2017 on the WSE will be started. In the current week, the financial statements will be published, among others, by PKN Orlen and Grupa Kety.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

So far, October has seemed to be very successful month for the index of the largest Polish companies. The WIG20 was dominated by the green color last week. Thus it ended the Friday’s trading session at 2,528 pts.. It is worth noting that the market temporarily managed to break a very important resistance level at 2,550 pts. - the volume of trade was increased as well. The blue-chip index has continued an upward trend. Moreover, the current levels of technical oscillators give room for the next test of the barrier at 2,550 pts. and for further increases of the index.

Graph 2: Millennium daily. Source: Stooq

This time Bank Millennium deserved the company of the week name. During the whole past week, the stock price of the entity rose by 11.9%. The share price has been in a long-term upward trend and it ended the period of consolidation in the last days. The volume of trade jumped noticeable and the moving averages formed a golden cross pattern – a buy signal. The resistance level at PLN 7.9 has been crucial for the bulls. A breakthrough of the barrier will open the way to a new upward wave. However, earlier, a correction cannot be ruled out. This might be soon signaled by the overbought technical oscillators. After all, this kind of scenario will not be a surprise, because after such dynamic growths some investors will probably want to realize their profits.

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

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