Summary

Donald Trump made some important decisions in the first days of his tenure e.g. he broke off negotiations on the TAFTA. What is more, the new president of the US confirmed the execution of his protectionist slogans against Mexico. This meant that the billionaire did not make empty promises, so he will probably consistently implement his electoral program. Thus, a trade war between China and the US may soon impend and a fiscal stimulus package may be entered. On the one hand, uncertainty appeared in the market – it was reflected in the weaker attitude of dollar against euro. On the other hand, investors believed that Donald Trump would boost the American economy. As a result, the US stock market indices ended last week in positive territory – the NASDAQ rose by 1.9%, the DJI went up by 1.3% and the S&P500 soared by 1%. Nevertheless, the latest macroeconomic data readings from the American economy did not support the market sentiment. The dynamic of the durable goods orders stood at -0.4% m/m vs 2.6% expected. Moreover, the annualized GDP growth for the fourth quarter of 2016 amounted to 1.9% vs 2.2% projected. Furthermore, it is worth paying attention to the PMIs from the Euroland. High values of the indices (55.1 pts. for the manufacturing sector and 53.6 pts. for the services one) confirmed good moods in the European economy. During the whole week, German DAX rose by 1.6%, British FTSE250 increased by 0.2%, whereas French CAC40 declined by 0.2%.

Compared with major global stock markets, the performance of the Polish stock indices was really outstanding. During the whole week, the WIG20 took off by 3.9%, the mWIG40 went up by 4.5% and the sWIG80 rose by 3.4%. The improvement in the market sentiment was undoubtedly the result of a much calmer political atmosphere. Moreover, positive signals from the Polish economy and favorable market tone on global markets also helped the stock indices to grow. Last week, investors learnt the unemployment rate which stood at 8.3%. The reading was in line with the market consensus. Moreover, the NBP published the minutes from the last meeting of the MPC. The document confirmed the announcements of Adam Glapinski on further stabilization of the interest rates in Poland.

A current week will be extremely interesting. The central banks will be in the spotlight i.e. the Fed, the Bank of England and the Bank of Japan. They will make decisions on the interest rates. In addition, it is worth paying attention to the macroeconomic data releases from the Euroland and the US, especially to data from the American labor market. In Poland, there will be publications of the manufacturing PMI and the preliminary data on the GDP growth for 2016.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

After a short correction, the index of the largest Polish companies started the third wave of growths. Therefore, the WIG20 ended last week at 2,084 pts.. The market tested the resistance level at 2,100 pts.. However, the attempt ended in failure. Growths were accompanied by the increased volume of trade as well. The RSI oscillator was overbought, whereas before that, the stochastic oscillator had indicated a buy signal. A potential success may be a harbinger of further growths towards the level of 2,200 pts.. Otherwise, the blue – chip index may realize two downward waves.

Graph 2: Pfleiderer daily. Source: Stooq

This time we chose Pfleiderer as a company of the week. During the last five trading days, its share price increased by 20.9%. The stock price has been moving in an upward trend since the beginning of 2016. Nonetheless, the market seemed to be in a third upward wave. After the breakthrough of the resistance levels at PLN 38 and PLN 40, the share price did not reach the next barrier at PLN 45. Technical oscillators were heavily overbought, so in the near future a correction cannot be ruled out. Furthermore, if the stock price does not defend the support level at PLN 40, the market will probably realize two downward waves.

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

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