Summary

After a revision of the monetary policy by the ECB, it was time for a long – awaited meeting of the FOMC. It took place last week and aroused a lot of market emotions. In line with market consensus, the interest rates were raised by 25 basis points. Nevertheless, the Fed announced another three hikes in 2017 (each of them by 25 basis points). The message turned out to be more hawkish than expected. As a result, dollar once again appreciated against other currencies. It should be noted that the Fed also tightened the monetary policy in December 2015 – it was the first hawkish decision for nine years. Moreover, another three or four interest rates hikes in 2016 were announced. Meanwhile, the last week decision turned out to be the only one this year. Furthermore, there were two other central banks which made a decision on the monetary policy last week: the Swiss National Bank and the Bank of England. However, in both cases the interest rates remained unchanged. The past week did not bring significant movements of major global stock indices. In Europe, German DAX rose by 1.8%, French CAC40 soared by 1.5%, whereas British FTSE250 declined by 0.3%. In the US, the DJI increased by 0.4%, while the S&P500 and the NASDAQ went down by 0.3%. Nonetheless, these American stock indices once again managed to reach their historical peaks. The last week was also successful for the investors at Ksiazeca – the WIG20 took off by 1%, the mWIG40 grew by 0.4% and the sWIG80 went up by 0.3%.

Last week investors also learnt a lot of macroeconomic data. However, this proved to be ambiguous in the Euroland and in the US as well. In the Eurozone, the readings of the ZEW indices and the manufacturing PMI (54.9 pts.) did not disappoint. Unlike to them, the manufacturing production growth rate (-0.1% m/m) and the services PMI (53.1 pts.) turned out to be significantly lower than the market consensus. In the US, the dynamics of the retail sales and the manufacturing production were lower than projected (0.1% m/m and -0.4% m/m). On the other hand, the reading of the Philadelphia Fed index exceeded expectations. The index stood at 21.5 pts. vs 9 pts.. There were also some publications from the Polish economy. The CPI amounted to 0.1% m/m. It meant that the deflation came to the end. Moreover, the dynamic of wages stood at 4% y/y vs 3.9% expected.

This week investors will focus on the bank of Japan which will make a decision on the monetary policy. In addition, investors will learn a lot of macroeconomic data from the largest global economies e.g. the final reading of the US GDP growth for the third quarter of 2016. In Poland, there will be publications of the dynamics of the retail sales and the manufacturing production, the PPI and the unemployment rate.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

It was another successful week for the WIG20 – the index defended the psychological level of 1,900 pts. and ended Friday’s trading session at 1,918 pts.. Special attention should be paid to the volume of trade, which remained at a very high level. However, the RSI oscillator showed a bearish divergence, so in the near future a correction cannot be ruled out. If a line of a short – term upward trend is not broken, the market will start a second growth wave. A key resistance level stands at 2,000 pts.

Graph 2: UniCredit daily. Source: Stooq

UniCredit is a company whose share price undoubtedly increased more than the Polish stock market indices last week. During the last five trading sessions, it grew by 13%. In August the share price reached this year’s low peak. Subsequently, it moved in a sideways trend. Nevertheless, the latest restructuring plans of the company were positively assessed by investors, so in December there were significant increases of the UniCredit’s share price. The moving averages formed a golden cross pattern – a strong buy signal. The nearest resistance level stands at PLN 14. On the other hand, the RSI oscillator may indicate a sell signal in the following days. This generates a risk of correction.

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

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