Summary

Last week major stock indices liked the green color. In Europe, German DAX went up by 4.5%, French CAC40 rose by 4.3% and British FTSE250 soared by 3.4%. In the US, the DJI took off by 2%, while the NASDAQ and the S&P500 grew by 1.5%. Lately, the market sentiment was extremely bullish, especially in the US. Thus, the DJI and S&P500 managed to reach its historical peaks. It seemed that the emotions connected with Brexit subsided. Investors focused on data from the US economy. The dynamics of the industrial production and the retail sales amounted to -0.7% y/y and 2.7% y/y. The results exceeded the market expectations. In addition, investors learnt data from the Chinese economy. The readings surprised positively once again. The GDP growth for the second quarter of 2016 stood at 6.7% y/y. The dynamics of the industrial production and the retail sales amounted to 6.2% y/y and 10% y/y. A coup attempt in Turkey deserved the political event of the week name. Unsuccessful attempt to grab a power by the military took place after the market close, so investors had much time for a thorough analysis of the whole event. Although the situation appeared to be under control, there was high probability that some adverse effects of this event would be noticeable.

In the past week the WSE took a leaf from the European and American markets. The main stock indices moved towards north. During the whole week, the WIG20 increased by 3.2%, the mWIG40 grew by 3.4% and the sWIG80 went up by 1.3%. This time economic calendar was not very rich. Investors learnt data on inflation. In June, the CPI stood at 0.2% m/m and -0.8% y/y. The highlight of the past week was the review of the Polish credit rating by Fitch. In line with market expectations, the agency did not change the note of the Polish creditworthiness. Analysts of this institution appreciated the condition of the Polish economy. Nonetheless, the agency expressed its concerns about the state of the public finances. In addition, it paid attention to the potential conversion of the loans denominated in Swiss francs which may shake the stability of the banking sector.

In the current week the ECB will be in the spotlight. There will be the first meeting of the Governing Council of the ECB after the referendum in the UK. The decision on the interest rates will be made. Moreover, investors will learn the ZEW indices and the preliminary PMIs for the Eurozone. In the US, the earnings season is gaining momentum, so the market will focus on the publications of the companies’ quarterly financial results. In Poland, it is worth paying attention to the data on wages. Furthermore, there will be releases of the dynamics of the retail sales and the industrial production as well.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

Last week was very successful for the largest companies listed on the WSE. The WIG20 moved towards north and ended the week at 1,759 pts.. The RSI oscillator remained neutral, whereas the MACD oscillator indicated a buy signal. It is worth paying special attention to the volume of trade which increased dynamically and confirmed the strength of the bulls. It may be a harbinger of further growths. The nearest resistance level stands at the psychological limit of 1,800 pts.

Graph 2: Bogdanka daily. Source: Stooq.

This time the company of the week name deserved Bogdanka. Its share price increased by almost 33%. As a result, the course managed to break a line of the accelerated downward trend. The share price approached the resistance level at PLN 47 as well. The RSI oscillator grew dynamically and indicated an overbought. On the other hand, the moving averages will probably form a golden cross pattern which will be a strong buy signal. The following days will be crucial for the Bogdanka’s shares. The breakthrough of the resistance level at PLN 47 may start an upward trend. However, much will depend on the price of coal which increased and supported the share price of the Lublin mine over the last few days.

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

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