Summary

The first week of July brought slight increases of major global stock market indices. During the whole past week, German DAX and French CAC40 went up by 0.5%, while British FTSE250 soared by 0.3%. In the US, the DJI rose by 0.3%, the NASDAQ took off by 0.2% and the S&P500 grew by 0.1%. It should be reiterated that the first days of the new month were extremely interesting in the financial markets. Investors learnt a lot of robust macroeconomic figures from the Euroland and the US. Special attention should be paid to the readings from the US, because lately, they had run of bad luck. This time investors learnt the services PMI and ISM indices which exceeded projections. The manufacturing PMI was 0.1 percentage point lower than consensus. What is more, the latest payrolls did not fail as well. Although the unemployment rate rose to 4.3% and the dynamic of wages was 0.1 percentage point lower than expectations, the non – farm payrolls stood at 222K vs 179K expected. Moreover, investors learnt the minutes from the last meetings of the FOMC and the ECB Governing Council. The documents did not bring anything new. The overall picture has remained unchanged – the hawkish Fed and the dovish ECB. Nevertheless, the ECB’s minutes confirmed that the council had considered the possibility of the launching monetary tightening. The body had agreed that it had been too early for that, albeit the market interpreted this event as an investment argument for euro.

In Poland, there is a holiday apathy on the WSE resulting in very low volume of trade. During the whole past week, the WIG20 declined by 0.2%, the mWIG40 went down by 1.8% and the sWIG80 fell by 0.9%. Of course the most important event of the week was Donald Trump’s first visit in Poland. However, this happening had only political significance, whereas it did not affect the Polish financial market. In addition, the MPC left the interest rates unchanged last week. The decision was in line with market consensus. It has seemed that the policy of the interest rates stabilization will be continuing in 2018 as well. In the meantime Sygnity was in the spotlight, because of the fact that the company broke its covenants. It is worth remembering that the subscription for the shares of Play is going on. The upcoming stock market debut will probably be the biggest IPO of a private company on the WSE.

This week investors will focus on the latest macroeconomic data releases, especially on the inflation readings from the US, China, some countries of the Euroland and Poland. Furthermore, investors will learn the dynamics of the manufacturing production and the retail sales from the US. In Euroland, there will be publications of the Sentix index and the manufacturing production growth rate. Moreover, special attention should be paid to the speech of Janet Yellen in the House of Representatives.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week brought a continuation of the current trend. The index of the largest Polish companies was moving in a sideways trend and testing the psychological barrier of 2,300 pts.. What is more, the volume of trade was really low. As a result, it was difficult to end the consolidation with limitations at 2,260 pts. and 2,360 pts.. Nevertheless, it is worth emphasizing that in a broader prospective the barriers at 2,170 pts. and 2,420 pts. have much more significance. At the close of Friday’s trading session the WIG20 stood at 2,295 pts.

Graph 2:Bioton daily. Source: Stooq

This time we chose Bioton as a company of the week. During the last five trading sessions its share price rose by 4.4%. The market sentiment did not support the stock price for a long time. Nonetheless, after the MACD oscillator had signaled a buy signal the share price started to grow dynamically. As a result, a V bottom pattern was formed – a signal of trend reversal. In addition, the volume of trade increased remarkable. It seemed that bulls returned, however only a permanent breakthrough of the resistance level at PLN 7 should be considered as a signal of trend reversal. In this scenario, it may be assumed that the share price will rebound from the resistance level at PLN 7.5 and then it will defend the psychological support at PLN 7.

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

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