Summary

The establishment of historical records on Wall Street apparently was not accidental. Even a week of weaker sentiment resulted in neutral ending, keeping indices close to records. Last FOMC meeting, which showed indecision among the local central bankers found fertile soil. They do not see the trouble of inflationary pressure, while data from the US economy, although good, is not yet convincing. Therefore it seems, that rate increases in September is not a basic scenario. This week will be crucial to confirm or negate such a scenario, as on Thursday an annual symposium in Jackson Hole is starting. Its culmination will be J. Yellen Friday's speech. It should give more insight to current views about monetary policy. It seems that the risk of hawkish transmission is relatively small.

Markets in Europe lag behind US. Firstly they are far from records, secondly, they decline last week. The DAX depreciated by 1.6%, French CAC40 by 2.2%, and British FTSE100 by 0.6%. The reason could be euro appreciation, returning concerns of euro area economy and fears about the banking sector. Correction scenario was supported by minutes of the last meeting of the ECB, which revealed that there is no determination to further easing in monetary policy, that could harm the banking sector.

Poor investment climate in Euroland resulted in vengeance on the Warsaw Stock Exchange. Largest companies index WIG20 lost most - 3.1%. mWIG40 decreased much less, only 1%, and sWIG80 fell by 0.1%. Polish zloty weakened as well hence the composition of declines suggests exit of foreign capital. In the context of the absence of new political factors markets focused on poor data from Polish economy like industrial production and retail sales for July. 500+ program does not translate into significant increase in consumption (unless we are talking about services) and the stagnation in the public sector and the lack of tenders related to the new EU perspective hits particularly hard construction industry.

This week's most important event will be already mentioned symposium in Jackson Hole. Previously definitely it is worth paying attention to some important data like PMI indices of services and industry from Germany, France and whole euro zone, German Ifo index or revision of US GDP for the second quarter.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

This time investors had to deal with a downward correction on the WIG20. Fortunately it was not built on high-selling activity, as evidenced by the average volume. However, we have reached an important support in the form of a downtrend line which was ruptured earlier. If it continues, a sell signal will become active, with an open way to levels below 1,700 points. So far, however, it has yet to confirm such a scenario. In the case of a return to growth, investors should pay attention to the resistance at around 1,900 points, and in case of another breakthrough - the psychological barrier of 2,000 points.

Graph 2: Medicalgorithmics daily. Source: Stooq.

The company of the week name this time goes to Medicalgorithmics. Thanks to Friday’s performance to the favorable court decision for the company. This news allowed share price to breakout from the last narrow consolidation. The move was confirmed by a large volume. However, in medium and long term a strong resistance in the vicinity of 290 PLN need to be overcome. Only then we can talk about the end of the long-term horizontal trend. Bulls should have enough strength to attack mentioned resistance, but its rupture is questionable. The negation of buy signal will be return below 250 PLN.

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

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