Summary

The meeting of the ECB Governing Council was the most important event of the past week. Although the body did not make any changes in the monetary policy, the conference with Mario Draghi aroused a lot of market emotions. The head of the bank probably wanted his speech to be neutral. On the one hand, he said that there were plenty of positive signals from the European economy, but on the other he confirmed the ECB readiness to continue QE. Nevertheless, Mario Draghi acknowledged that the future of QE would be discussed in the autumn as well. These words were interpreted as hawkish ones by the market. Thus euro appreciated against dollar by 1.7% last week. However, these signals from the ECB did not support the European stock market sentiment. During the whole past week, German DAX went down by 3.1% and French CAC40 declined by 2.3%. In the meantime, a bull market on Wall Street was going on. During the last five trading days, the NASDAQ rose by 1.2% and the S&P500 increased by 0.5%. Unlike to them, the DJI fell by 0.3%. It is worth paying attention to the data from China as well. The latest macroeconomic releases turned out to be higher than market expectations, for instance, the dynamic of the GDP in the second quarter of 2017 stood at 6.9% vs 6.8% expected. Undoubtedly, this was very good news for the global economy, albeit investors’ enthusiasm was quite moderate. The market have had a lot of doubts on the credibility of the Chinese statistical offices, especially since the Chinese economy struggles with many structural problems which are not directly reflected in the most popular economic indicators.

In Poland, the stock market was dominated by the red color last week. During the last five trading sessions, the WIG20 went down by 0.3%, the mWIG40 decreased by 0.4% and the sWIG80 deteriorated by 1.4%. This time the market focused on the latest macroeconomic data releases. In June, the dynamic of the wages stood at 6% y/y vs 5% expected and the manufacturing production growth rate amounted to 4.5% y/y vs 3.8% projected. On the other hand, the retail sales grew by 6% y/y – the result was 0.9 percentage point lower than the market consensus. It should be also noted that GetBack launched its IPO on the WSE last week. The first trading day was not successful for the shareholders (+0.3%), whereas during the whole past week the stock price increased by 4.3%.

The most important event of the current week will be the FOMC meeting, but this time without a press conference. Moreover, it is worth paying attention to the latest macroeconomic readings, especially to the numerous publications of the GDP’s dynamics, among others, from the US. Furthermore, the earnings season of the companies listed on the WSE will start this week.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week’s attempt to break out of a short–term consolidation ended in failure. After dynamic growths at the beginning of the past week the strength of demand was falling - bears took the initiative. The apathy of the WIG20 was going on. As a result, the Blue–Chip index ended the last week at 2,343 pts.. However, it is worth remembering that a breakthrough of the resistance level at 2,360 pts. will be only a half of the success – a barrier at 2,420 pts. is much more crucial. A potential breakthrough of this barrier will create space for further increases.

Graph 2:Energa daily. Source: Stooq

This time we chose Energa as a company of the week. During the last five trading sessions its share price rose by 11.9%. A publication of an amendment to the RES act improved the market sentiment over the Energa’s share price – the changes were positively evaluated by the company and investors. Thus the upper limit of a current consolidation at PLN 11.4 was broken – this opened the way to further increases towards the level at PLN 13.7. Nonetheless, it is worth paying attention to the overbought technical oscillators which soon may indicate sell signals. Therefore, a correction cannot be ruled out in the short–term. The defense of the barrier at PLN 11.4 will be the most important aspect for bulls.

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

This material is intended to be for informational purposes only and does not constitute any investment, legal or tax advice or any other type of advice nor constitute an offer according to the Civil Code or a public offer within the meaning of the Act on Public Offering. MM Prime TFI SA has done due diligence to ensure that the information contained in this presentation is accurate and based on reliable sources. MM Prime TFI SA is not responsible for the accuracy and completeness of the information, nor for any damage that may arise from the use of it. Nothing in this document should be construed as an investment advice. The use of this material as the basis or evidence to make an investment decision takes place at the sole risk of the person who takes such a decision. This material is available free of charge.