Summary

Last week, major global stock market indices were dominated by the green color. During the whole week, French CAC40 increased by 3.1%, German DAX rose by 1.9% and British FTSE250 soared by 1.6%. In the US, the DJI went up by 0.9%, the S&P500 took off by 0.7% and the NASDAQ grew by 0.4%. The market focused on the US. There was a speech of Donald Trump. However, the President once again did not present any specifics concerning his economic promises. After all, the allocution was clearly pro – business, so the market reaction was rather positive. In the meantime, the members of the FOMC managed to significantly affect the market expectations on the monetary policy. Their hawkish comments were crowned with a pro – restrictive public appearance of Janet Yellen. The probability of a March interest rate raise increased appreciably, whereas Eurodollar surprisingly ended Friday quotations with a long white candle. In addition, data from the American economy did not fail, for instance, the PMIs and the ISM indices. It is also worth paying attention to the macroeconomic data from the Eurozone, which were mostly in line with the market expectations. Nevertheless, the dynamic of the retail sales was quite disappointing. It stood at -0.1% m/m vs 0.4% expected.

Once again, the WSE was dominated by bulls. During the whole past week, the WIG20 grew by 1%, the mWIG40 increased by 0.8% and the sWIG80 went up by 3.3%. Certainly, the latest data from the Polish economy supported the market sentiment. The final release of the dynamic of the GDP for fourth quarter of 2016 amounted to 2.7% y/y. The manufacturing PMI declined to 54.2 pts. from 54.8 pts.. However, it was still a solid reading which confirmed a strong condition of the Polish industry. Furthermore, investors focused on the financial reports of companies listed on the WSE. The financial performance of CCC turned out to be impressive. Moreover, the company would continue its dynamic expansion. As a result, the share price of CCC reached its historical peak. Solid financial results were also presented by Dom Development, Apator, Idea Bank and Comarch.

A current week will be extremely interesting. Central banks will be in the spotlight. The Polish MPC and the Governing council of the ECB will make decisions on the interest rates. In both cases, the market does not expect any changes. Nonetheless, investors will pay special attention to the conference with Adam Glapinski, who probably refers to the shape of the monetary policy in a time of significantly rising inflation. In addition, investors will learn a lot of macroeconomic figures, including the latest data from the American labor market.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The first week of March brought further increases in the index of the largest Polish companies. A long – awaited correction did not come around. Thus, the WIG20 ended last week at 2,232 pts.. On the one hand, the index rebounded from the resistance level at 2,270 pts. twice, but on the other, a double top pattern was not confirmed by the volume of trade. A breakthrough of the support level at 2,200 pts. should be considered as a potential sell signal. Otherwise, in the case of further increases, the market will move towards the resistance level at 2,300 pts.

Graph 2: LARQ daily. Source: Stooq

We chose LARQ as a company of the week. During the last five trading sessions, the share price of the holding grew by 10.2%. The moving averages formed a golden cross pattern. Subsequently, the stock price started to grow dynamically. As a result, a new upward wave began and the share price reached its historical peak. However, the RSI oscillator was overbought, the stock price did not break the peak and the last session candle generated the risk of correction. If the next candle is black, a hanging man candlestick will be formed – an announcement of declines.

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