Summary

Certainly, the first week of May was not successful for investors. In the US, the NASDAQ decreased by 0.8%, the S&P500 fell by 0.4% and the DJI deteriorated by 0.2%. In Europe, French CAC40 went down by 2.9%, German DAX declined by 1.7% and British FTSE250 dropped by 0.9%. Last week data from the US economy was in the spotlight, especially from the labor market. Generally, they did not fail. Nonetheless, the reading of the nonfarm payrolls change disappointed investors. It stood at 160.00K in April vs 208.00K in March. On the other hand, it is worth reiterating that the unemployment rate amounted to 5% - the level was close to the natural unemployment rate. Thus, the readings did not adversely affect the market sentiment. In the Eurozone, investors learnt the values of the PMIs. The manufacturing PMI stood at 51.7 points, while the services PMI amounted to 53.1 points. It is also worth paying attention to the latest data on Brexit collected by Bloomberg – 41% of British supported leaving the EU, while 40% wanted to remain. These figures confirmed that the probability of the Brexit was still high. Moreover, China published the PMIs. Their values were slightly lower than the market expectations. Nevertheless, the publications did not significantly impact on market tone.

Polish stock indices ended last week in a negative territory – the WIG20 went down by 2.3%, the mWIG40 declined by 2.2% and the sWIG80 fell by 0.9%. Investors learnt the value of the manufacturing PMI. Nonetheless, the publication turned out to be another disappointing reading from the Polish economy – the index stood at 51 pts. in April vs 53.8 pts. in March. The highlight of the week was the MPC meeting. As expected, the council did not change the interest rates. What is more, the conference with the participation of some representatives of the MPC did not arouse much emotion. In addition, Adam Glapinski was officially appointed as the president of the NBP. Meanwhile, X – Trade Brokers Dom Maklerski launched its IPO.

In the current week, it is worth paying attention to data from major European economies: Germany, France, Great Britain and Italy. Furthermore, the Eurozone will publish the Sentix index, the dynamic of the industrial production and the GDP growth for the first quarter of 2016. Investors will also learn data on American retail sales. Moreover, China will present the dynamics of the retails sales and the industrial production. In Poland, there will be a publication of data on the inflation. On Friday, Moody’s will present an overview of Poland’s ratings.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The beginning of the week brought a slight increase of the WIG20. However, after Tuesday’s break on the WSE, the market was dominated by bears. On Friday, the index initially continued to decline, although subsequently it rebounded from the support of 1,826 pts. (the 50% Fibonacci retracement). A breakthrough of the barrier could have been a clear signal for further declines towards the psychological level of 1,800 pts.. In addition, Friday’s growth was confirmed by high level of volumes. The RSI oscillator went down dynamically, whereas it did not indicate a buy signal.

Graph 2: Prochnik daily. Source: Stooq.

We chose Prochnik as a company of the week. During the whole week, the share price increased by 12.2%. Thus, it reached this year’s peak (PLN 1.56). It is worth emphasizing that the course was in an upward channel. Moreover, the trend was confirmed by high level of volumes as well. The nearest resistance stands at PLN 1.66. The breakthrough will be a signal for further growths towards the psychological level of PLN 2. On the other hand, the RSI oscillator pointed out an overbought. Therefore, a correction can be expected.

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

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