Summary

Last week was exceptional for the major American stock indices. On Thursday, the DJI, the NASDAQ and the S&P500 reached their historical peaks. The last time a similar situation occurred 17 years ago. However, during the whole week, all these indices reported slight growths. The market sentiment was bullish in Europe as well. German DAX rose by 3.3%, British FTSE250 increased by 2.6% and French CAC40 took off by 2%. It is worth paying attention to the latest macroeconomic data from the Eurozone. The GDP growth for the second quarter of 2016 amounted to 1.6% y/y. The result was in line with market expectations. Nonetheless, the reading of the industrial production growth rate turned out to be slight lower than projections - 0.4% y/y vs 0.8% expected. In the US, the dynamic of the retail sales stood at 2.3% y/y in July vs 3% in June. The result disappointed investors. Moreover, the reading of the PPI also failed. The index stood at -0.2% y/y vs 0.3% expected. The attention should be paid to the latest economic data from China as well. The dynamics of the industrial production and the retail sales amounted to 6% y/y and 10.2% y/y. Furthermore, investors focused on the oil market. Despite the reported increase in the number of wells in the US and the still growing oil production, the price of the black gold increased by more than 6% during the whole week.

The second week of August brought increases on the WSE. The WIG20 rose by 1.8%, the mWIG40 grew by 3.9% and the sWIG80 soared by 1.1%. Last week investors learnt the CPI. It stood at -0.9% y/y in July vs -0.8% in June. In addition, the CSO published the preliminary estimate of the GDP growth for the second quarter of 2016. The result of 3.1% y/y was lower than projections (3.3%). Nevertheless, the publications of the quarterly financial reports of the companies listed on the WSE were in the spotlight. The financial performance of Energa disappointed investors. The company reported a loss much higher than expected. Negative financial results were also reported by other energy companies e.g. PGE and PGNiG. However, the financial report of Alior Bank did not fail. The company made a profit in line with market consensus.

The highlight of the week will be the publications of the minutes from the last meetings of the ECB Governing Council and the FOMC. What is more, investors will learn data from the US: the CPI, the dynamic of the industrial production, the Conference Board index and the Philadelphia Fed index. In the Eurozone, there will be releases of the ZEW indices and the CPI. In Poland, investors will learn the wages growth rate, the PPI, the dynamics of the industrial production and the retail sales.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week was another, in which the index of the largest companies was dominated by bulls. As a result, the WIG20 ended the second week of August at 1,857 pts.. It is worth noting that the index definitely broke the line of the long – term downward trend. However, the volume of trade was very low. On the one hand, it could have been result of the holiday period, whereas on the other, it might have been a confirmation that the market was still weak. The RSI oscillator grew rapidly and it may indicate the overbought soon. The nearest resistance level stands at the psychological level of 1,900 pts.

Graph 2: Uniwheels daily. Source: Stooq.

This time the company of the week name deserved Uniwheels. During the whole week, its share price increased by 17.9%. This year has been very successful for the company. After significant growths, there was a period of the consolidation. However, it was completed in July. Since then, the course moved towards north dynamically. The RSI oscillator indicated the overbought, so in the near future a correction can be expected. The nearest support level stands at PLN 180. Subsequently, the third upward wave will probably be realized.

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

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