Summary

Last week investors focused on the minutes from the last meeting of the FOMC. It confirmed the hawkish attitude of the Fed’s representatives – they did not rule out the interest rate raise in June, providing that economic data for the second quarter of 2016 would acknowledge the strength of the US economy. Meanwhile, it is worth paying attention to the latest data from the American economy – the CPI amounted to 1.1% y/y in April vs 0.9% in March, while the dynamic of the industrial production stood at -1.1% y/y in April vs -2% in the previous month. What is more, the reading of the leading indicators index did not fail as well. The index amounted to 0.6% in April vs 0.4% expected. During the whole week, the NASDAQ rose by 1.1%, the S&P500 grew by 0.3%, whereas the DJI declined by 0.2%. This time investors did not learn too many relevant data from the Eurozone. Nonetheless, it is worth paying attention to the data on inflation – the CPI stood at -0.2% y/y in April vs 0% in March. Deflation in the Euroland remained strong. It could not have been an incentive to the tightening of the monetary policy by ECB. During the whole week, British FTSE250 went up by 1.6%, French CAC40 increased by 0.8%, while German DAX deteriorated by 0.4%.

It was the fourth consecutive week in which the WSE moved towards south. As a result, major Polish indices ended the week in the red color – the WIG20 fell by 0.5%, the mWIG40 went down by 0.9% and the sWIG80 declined by 0.3%. Due to the improved market sentiment (after presentation of the Polish credit rating by Moody’s), the beginning of the week seemed promising. Subsequently, the market was dominated by bears. Investors learnt much crucial data from the Polish economy. The dynamics of the industrial production and the retail sales stood at 6% y/y and 3.2% y/y. Furthermore, the level of the wages increased by 4.6% y/y. It should be reiterated that the earnings season of companies listed on the WSE came to the end. A special attention should be paid to the financial statements presented by ZE PAK and Wielton. – their quarterly financial results turned out to be higher than market expectations. On the other hand, the results of Inpost and Integer extremely disappointed investors. Moreover, i2 Development launched its IPO on Thursday.

In the current week investors will pay attention to the data from the Eurozone – the PMIs and the ZEW indicators. In addition, there will be a reading of the German Ifo index. Moreover, investors will learn the dynamic of the durable goods orders in the US. Nevertheless, the revision of the American GDP growth will be in the spotlight. In Poland, investors will learn the unemployment rate. There will also be a release of the minutes from the last MPC’s meeting. It is worth remembering that the WSE will be closed on Thursday – the feast of Corpus Christi.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

After the dynamic increases at the beginning of the week, the WIG20 started to move towards south once again. What is more, the index managed to break the psychological level of 1,800 pts.. Nonetheless, the WIG20 ended last week at 1,806 pts.. The RSI oscillator remained neutral, although a downward trend seemed very clear. It was confirmed by higher volumes, so by the accumulation/distribution indicator as well. The nearest support stands at 1,788 pts. – 61.8% Fibonacci retracement. The breakthrough of this barrier will be a signal for further declines towards the level of 1,700 pts.

Graph 2: ZE PAK daily. Source: Stooq.

One of the most interesting shares in the past week were those of ZE PAK – the price rose by 38.8%. The course broke the line of the long – term downward trend and ended the week at PLN 12.7. The strength of the bulls was confirmed by higher volumes. The publication of the company’s financial statement for the first quarter of 2016 helped its share price to grow. The results were better than the market expectations. Nevertheless, the RSI oscillator indicated an overbought. Therefore, a potential correction would not be a surprise.

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