Summary

Last week, the economic calendar was extremely interesting. First and foremost, investors focused on the public appearance of Theresa May who announced “hard” Brexit. After all, the plan of leaving the EU by the Great Britain was rather positively assessed by the market. Thus, pound significantly appreciated against other foreign currencies. The meeting of the ECB Governing Council was another very important event last week. The council did not make any changes in the monetary policy. Moreover, Mario Draghi emphasized that the bank did not consider limiting the scope of QE - it was very good information for the stock markets. There was also a conference with the participation of Janet Yellen. She confirmed earlier announcements on the gradual tightening of the monetary policy. However, the information did not support dollar. There were plenty of indications that it had already been discounted by the market. Furthermore, Donald Trump, the 45th President of the US, was inaugurated on Friday. This time the speech of the new head of state did not arouse many market emotions – it contained a lot of populist and pro – growth economic slogans, and the protectionist ones as well. There was also the World Economic Forum in Davos last week. Nonetheless, it was eclipsed by the already mentioned events. This time major global stock indices ended week in the red color – the NASDAQ and the DJI went down by 0.3%, while the S&P500 decreased by 0.2%. In Europe, French CAC40 fell by 1.5%, British FTSE250 declined by 1.2%, while German DAX rose by a symbolic 0.01%.

In Poland, the latest macroeconomic data was in the spotlight. This time the readings did not disappoint investors. The dynamic of the retail sales stood at 6.4% y/y vs 6.1% expected and the manufacturing production growth rate amounted to 2.3% y/y vs 1.8% projected. Nevertheless, the dynamic of the construction – assembly production shrank by 8% y/y. After all, it was quite good information, because a November reading stood at -20% y/y. The robust data supported small and medium – sized companies listed on the WSE. During the whole week, the mWIG40 took off by 1.3% and the sWIG80 rose by 1.4%. Unlike to them, the blue chip – index caught a slight shortness of breath – the WIG20 went down by 0.5% last week.

The last week was full of political events, whereas the following days will bring plenty of macroeconomic data releases. It is worth paying attention to the PMIs for the Euroland and the US. What is more, investors will learn a lot of other data from the American economy: the Conference Board index, the Richmond Fed index and the dynamic of the GDP growth for the fourth quarter of 2016. In Poland, the CSO will publish the unemployment rate for December.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week, in line with the earlier technical signals, brought a correction of the WIG20. As a result, the index of the largest Polish companies ended previous week at 2,006 pts.. If the index continues a correction, it will probably move towards the psychological level of 2,000 pts. and even it may approach the 1,957 pts. mark. However, it should be noted that the volume of trade was quite lower than it had been in the previous weeks. There were plenty of indications that the WIG20 would remain in an upward trend. Another wave of growths may push the value of the index towards the 2,150 pts. mark.

Graph 2: Agroton daily. Source: Stooq

Lately, special attention should be paid to the Ukrainian companies listed on the WSE. Among them, the brightest star seemed to be Agroton. During the whole week, its share price increased by 20%. Moreover, the growths were accompanied by the increased volume of trade. The stock price has been moving in an upward trend and it has been systematically breaking consecutive resistance levels. However, the RSI oscillator was overbought, so a correction cannot be ruled out. The nearest support level stands at the psychological level of PLN 6.

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

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