Summary

In the last week of June the market sentiment was bullish. In Europe, French CAC40 rose by 4.1%, British FTSE250 went up by 2.4% and German DAX took off by 2.3%. In the US, the NASDAQ increased by 3.3%, while the S&P500 and the DJI soared by 3.2%. As a result, within five days major stock indices recovered all the losses which had been reported on “Brexit Black Friday”. The latest macroeconomic data contributed to improving the market tone. In the US, the GDP growth for the first quarter of 2016 stood at 2.1% y/y and 1.1% q/q. These results exceeded the market expectations. Moreover, the readings of the following indices did not fail: the Conference Board index (98 pts.), the Chicago PMI (56.8 pts.) and the ISM manufacturing index (53.2 pts.). Furthermore, the releases of the industrial PMIs for the leading EU economies surprised positively. The index for the Eurozone amounted to 52.8 pts. vs 52.5 pts. expected. However, the publication of the industrial PMI for China disappointed investors. The index stood at 48.6 pts. vs 50 pts. expected. Nonetheless, it did not affect the market sentiment. It is worth paying attention to the dovish statement of Jerome Powell – the representative of the Fed. It is possible that Brexit will turn out to be a key argument for the postponement of a long – awaited interest rates raise in the US.

In the past week the Polish stock indices of the small and medium companies reported significant increases – the mWIG40 rose by 1.6% and the sWIG80 increased by 3.2%. Unlike to them, the largest companies failed - the WIG20 deteriorated by 1.4%. Besides the most important event for the Poles (the quarter – final between Poland and Portugal at Euro 2016), investors learnt the industrial PMI. It stood at 51.8 pts. in June vs 52.1 pts. in May. In addition, the rating agency S&P published the Polish credit rating on Friday. This time there weren’t any changes, whereas the agency once again reiterated its concerns about the independence of the NBP and the Constitutional Court. The S&P’s decision did not affect the market sentiment. Nevertheless, the picture of the market may be changed on Monday morning – investors will learn more details on the future of OFE.

In the current week it is worth paying attention to the data from the Eurozone: the services PMI, the dynamic of the retail sales and the PPI. In the US, there will be publications of data from the labor market and the minutes from the last meeting of the FOMC. In Poland, the MPC will decide on the interest rates. It will be the first meeting chaired by Adam Glapinski, the new president of the NBP. What is more, the NATO summit in Warsaw is beginning on Friday.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week the WIG20 was trying to recover the recent losses which had been the effect of the investors’ reaction to the results of the British referendum. Thus, there was higher volume of trade. Nevertheless, the bears did not give up. Therefore, the blue – chip index ended last week at 1,744 pts. The RSI oscillator remained neutral. It is worth noting that the index fluctuated around the level of 1,738 pts. (76.4% Fibonacci retracement). This support may be a very strong barrier for the market. The potential resistance stands at the psychological level of 1,800 pts.

Graph 2: Alumetal daily. Source: Stooq.

Alumetal deserved the company of the week name. During the whole week, its share price increased by 6.6%. The company was considered among those who could have gained from Brexit, especially from the depreciation of the Polish currency. The share price of the Polish exporter is in an upward trend. Moreover, it approached its historical peak of PLN 58.2. The RSI oscillator grew and it may indicate a sell signal soon. It cannot be ruled out that the nearest resistance will end the period of the bulls dominance. On the other hand, the last increases were accompanied by a very high volume of trade which can be a harbinger of further growths.

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

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