Summary

Last week, the market focused on the FOMC meeting. As expected, the council raised the interest rates by 25 basis points, so investors paid special attention to the Fed’s message and a conference with Janet Yellen. These turned out to be hawkish. The FOMC is going to make one more interest rates hike by the end of this year and next three in 2018. In addition, the Fed presented a very precise program to reduce its balance sheet. After all, the scale of the dollar’s appreciation was negligible – it was quite surprising, especially since the ECB maintained a dovish attitude. Furthermore, despite the Fed’s assurances that the US economic slowdown has been only temporary, a series of weak macroeconomic data readings from the US is going on. In May, the dynamic of the retail sales stood at -0.3% m/m vs 0.1% expected, while the manufacturing production did not change – the market consensus amounted to 0.2%. Moreover, there has been some market’s worries because of the American stock market indices’ low volatility and declines in the share prices of the American technology companies. Last week, the market sentiment was quite mixed. During the whole past week, the DJI rose by 0.5%, the S&P500 increased by 0.1%, whereas the NASDAQ went down by 0.9%. In Europe, British FTSE250 grew by 0.2%, while French CAC40 decreased by 0.7% and German DAX fell by 0.5%. It is worth adding that there was a second round of the French parliamentary elections on Sunday. However, unlike to the presidential elections, those did not matter so much to the financial markets. The party of Emmanuel Macron has gained an absolute majority in the National Assembly.

The Polish stock market indices saw slight changes last week. What is more, there was low volatility – probably this was a result of a long weekend. During the whole week, the WIG20 rose by 0.4%, the sWIG80 went up by 0.3%, whereas the mWIG40 declined by 0.5%. This time investors focused on the numerous changes in management teams of some State Treasury companies, among others, in Alior Bank, PZU and Pekao. However, the economic calendar was not rich in the past week. Investors learnt the CPI. The result of 1.9% y/y was in line with projections and it did not have an impact on the market’s expectations on the further shape of the monetary policy of the MPC.

In recent weeks central banks were in the spotlight. The current week will be definitely more uneventful, although investors will pay attention to the macroeconomic data releases, among others, the publications of the PMIs for the US and the Euroland. Nevertheless, this time the greatest amount of data will come from Poland. Investors will learn the dynamic of wages, the PPI and the growth rates of the manufacturing production and the retail sales.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The index of the largest Polish companies has remained in a consolidation with limitations of 2,260 pts. and 2,425 pts.. Moreover, the market still has tested the psychological barrier of 2,300 pts.. The WIG20 ended the last week at 2,304 pts.. Despite a long weekend, the volume of trade was relatively high last week, especially on Friday which was a triple witching day. A correction has been continuing and a holiday season is coming – the activity of investors will be shrinking which may make it difficult to start a new bull market phase.

Graph 2: Livechat daily. Source: Stooq

This time it is worth paying special attention to Livechat. Its stock price has been moving in a long – term upward trend, albeit in recent months the market was in a consolidation. Last week’s growths (5%), which were signaled by the MACD oscillator, led to the breakthrough of an upper limitation of the sideways channel (PLN 57). This has opened a way to the further movements towards north, so to the next historical peaks as well. It should be also noted that the volume of trade increased – a confirmation of bulls’ strength. Of course, a correction cannot be ruled out in the coming days, so the most crucial aspect for the bulls seems to be a defense of the support level at PLN 57.

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

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