Summary

Last week investors focused on macroeconomic data readings from major global economies. Some data from the US was disappointing, whereas the most important one turned out to be robust. Special attention should be paid to the annualized GDP growth for the third quarter of 2016. It stood at 2.9% vs 2.5% projected. Furthermore, the publications of the PMIs did not fail as well. The manufacturing PMI amounted to 53.2 pts. vs 51.6 pts. expected and the services PMI stood at 54.8 pts. against market consensus at 52.5 pts.. The robust readings confirmed market’s expectations that the interest rates raise in the US would probably take place in December. Investors learnt also some data from the Euroland. Most of the confidence indices exceeded projections. What is more, the preliminary manufacturing PMI stood at 53.3 pts. vs 53 pts. expected and the preliminary services PMI amounted to 53.5 pts. vs 52.4 pts. projected. Nonetheless, there were indications that the monetary policy of the ECB would remain dovish. Reuters reported that the bank intended to extend and expand QE. Paradoxically, this information did not affect quotations of euro and the European stock market sentiment. During the whole week, French CAC40 rose by 0.3%, German DAX went down by 0.1% and the British FTSE250 fell by 1.6%. In the US, the DJI grew by 0.1%, the NASDAQ deteriorated by 1.3% and the S&P500 decreased by 0.7%.

The picture of the WSE was quite different than the last time. Certainly, Blue chips should be distinguished – during the whole week, the WIG20 took off by 3.7%, while the mWIG40 fell by 0.2% and the sWIG80 went up by 0.4%. The national economic calendar was not as interesting as the global one. Nevertheless, investors learnt the unemployment rate. It stood at 8.3% in September vs 8.4% in August. In addition, investors focused on quarterly financial results of companies listed on the WSE. The financial performance of Lotos was better than expected. In contrast, the shareholders of XTB had slightly fewer reasons to be happy - the financial statement of the company turned out to be disappointing. It should be also reiterated that Stelmet launched its IPO last week.

The highlight of the current week will be the FOMC meeting. Investors expect that the Fed will announce a December interest rate raise. The decisions on the monetary policy will be made by the BoJ as well. Moreover, it is worth paying attention to the latest payrolls and the ISM indices from the US. There will also be some releases from the Eurozone: the GDP growth for the third quarter of 2016, the unemployment rate and the PPI. What is more, investors will learn the manufacturing PMI for Poland.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week brought long - awaited increases in the index of the largest Polish companies. Thus, the WIG20 ended the last week above the psychological level of 1,800 pts. (1,817 pts.). The market sentiment improved, whereas it was too early to talk about the beginning of a new trend. First, the index needs to break an important resistance level at 1,870 pts.. It will be an incentive to start a new trend. Nevertheless, the RSI oscillator increased rapidly. It may soon indicate a sell signal. Before a possible test of the 1,870 pts. mark the market may be in a correction phase.

Graph 2: Lotos daily. Source: Stooq

This time Lotos deserved the company of the week name. During the whole week, its share price increased by 12.8%. After the MACD oscillator had indicated a buy signal, the course started to grow and reached this year’s peak (PLN 32.6). Moreover, a price gap was formed. It is worth paying attention to the increased volume of trade as well. The market seemed to be dominated by bulls. After all, the RSI oscillator indicated overbought, so in the near future a correction can be expected.

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

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