Summary

The last week’s economic calendar was quite uneventful, so trading in the global financial markets was rather smooth. During the whole past week, British FTSE250 declined by 0.7%, German DAX fell by 0.2%, while French CAC40 increased by 0.2%. In the US, the S&P500 went up by 0.2% and the DJI rose by 0.1%. A slightly more remarkable movement was seen by the NASDAQ (1.8%), which earlier had been shrinking dynamically – a sell – off of the American technology companies’ shares. Moreover, the situation of Eurodollar did not change last week – EUR/USD was in a consolidation at 1.111 – 1.129. However, it is worth paying special attention to some statements of the Fed’s representatives. Unlike to the official FOMC’s statement, their commentaries were quite dovish. They said that it was worth waiting for the next stages of the monetary tightening until economic data would improve and inflation would rise. Furthermore, a series of weak data from the US economy was going on. The preliminary readings of the PMIs turned out to be disappointing. The manufacturing PMI stood at 52.1 pts. vs 53 pts. expected and the services PMI amounted to 53 pts. vs 53.7 pts. projected. These results confirmed good business sentiment, whereas pointed to a decline in the optimism of managers in the US. The indices were also published in the Euroland. They stood at 57.3 pts. for the manufacturing sector and 54.7 pts. for the services sector. It is worth adding that there was the UE summit last week. After all, the event remained in the background for the market.

In Poland, the blue – chip index did not see any changes last week. Nevertheless, during the whole past week, the mWIG40 grew by 1.9% and the sWIG80 fell by 0.4%. Investors learnt a lot of important data from the Polish economy last week. The average wages rose by 5.4% y/y in May. Furthermore, the dynamics of the retail sales and the manufacturing production stood at 8.4% y/y and 9.1% y/y. These robust releases confirmed the strength of the Polish economy. It should be also noted that the WSE ended the period of interregnum – Marek Dietl became a new chairman of the company. In addition, Play Communications officially announced its IPO on the Polish stock market last week.

This week, the market will focus on numerous speeches of Mario Draghi and other representatives of the European central banks during a multi – day conference in Sintra. Moreover, there will be a public appearance of Janet Yellen in London. Investors will learn some macroeconomic data releases as well, among others, a revision of the American GDP growth rate in the first quarter of 2017 and the confidence indices for the Euroland. In Poland, there will be a publication of the unemployment rate.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

During the last five trading days, the technical situation of the WIG20 did not change. The first part of the past week was dominated by bears, albeit bulls managed to take the initiative quickly and make up for losses. In the last days of the week the market was fluctuating around the psychological level of 2,300 pts.. As a result, the index of the largest Polish companies did not see any changes and it ended the last week at 2,304 pts.. A consolidation has been going on – it encourages investors to wait for a clear market signals. A key support and resistance levels stand at 2,260 pts. and 2,420 pts.

Graph 2: Sfinks daily. Source: Stooq

This time special attention should be paid to Sfinks whose share price grew by 6.8% last week. Lately, there were dynamic growths of the stock price, which were signaled by the MACD and the RSI oscillators. Thus, a V - bottom chart pattern was formed – a signal of a trend reversal. What is more, a short – term moving average cut above a long - term one from below – a buy signal. Nevertheless, the market did not manage to break an important resistance level at PLN 2.5. A potential breakthrough of this barrier should be considered as a confirmation of the trend reversal. In that case, the next resistance level stands at PLN 2.7.

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

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