Summary

The second week of the new year was marked by high volatility in global financial markets. Initially, the stocks were dominated by bulls. Certainly, better than expected volumes of export and import in China improved the markets’ sentiments. However, the market tone changed on Wednesday. As a result, most important stock exchanges moved towards the south. It was caused by the release of Beige Book which contained the economic outlook for the US. The analysis showed that the recovery might be uncertain. To add insult to injury, the commodity crisis did not help American stocks to grow – the oil price fell below $30 per barrel. Moreover, these concerns intensified on Friday when there was a release of economic data from the US. Unfortunately, the dynamic of retail sales and industrial production in December reached negative values. Therefore, the stock markets ended the week in the red. The NASDAQ decreased by 3.3%, while the DJI and the S&P500 fell by 2.2%. The week was not successful for European stocks as well – British FTSE250 went down by 3.4%, German DAX declined by 3.1% and French CAC40 deteriorated by 2.9%.

The WIG ended the week in red too. Nevertheless, the largest companies of the WSE moved in their own, independent of the markets’ sentiment environment. As a result, the WIG20 took off by 0.6%. The result could be better, whereas the presidential bill on conversion of loan taken out in Swiss francs caused a strong sale in the banking sector. Furthermore, this time small and medium - sized companies failed – the mWIG40 decreased by 1.1% and the sWIG80 fell by 1.4%. It should be also noted that the MPC, in which the most of members ended their terms of office, did not change interest rates. Meanwhile, the Senate chose three new members who were in favor of current monetary policy. Moreover, on Friday evening the S&P rating agency downgraded the credit rate for Poland to “BBB+” from “A-“. The agency said that new government weakened the independence of key institutions. The currency market reacted immediately – the strong depreciation of polish zloty. In regards to stock market, it opened a new week in the red as well.

This week investors will focus on readings of GDP growth, industrial production and retail sales in China. In the face of declines in the US, the data from the American real estate market can also be crucial. In Poland, investors will learn data on industrial production and retail sales.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

It could be a really good week for the WIG20, whereas the presidential bill, that was negative for banks, did not help to break the resistance of 1777 pts.. The breakthrough could have caused further growths towards the psychological level of 1900 pts. It was worth noting that there was also a high level of volumes. This meant the bulls probably returned to the market. In addition, the RSI oscillator indicated a buy signal. Nevertheless, it seems that political risk and the rating cut will be stronger than the technical signals. Therefore, the WIG20 may continue the downward trend.

Graph 2: GTC daily. Source: Stooq.

This time we chose GTC (Global Trade Center) as a company of the week. Despite a very poor market sentiment, its shares continued an upward trend. The share price will probably test the resistance of PLN 6.91. The breakthrough will be the signal of the trend continuation. The RSI oscillator did not indicate any signals, whereas it began to grow. On the other hand, the MACD oscillator pointed out a sell signal. Therefore, the PLN 6.91 mark seems to be a key - unless the share price breaks the resistance, there will be probably a trend reversal.

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

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