Summary

Last week, the global stock market sentiment was bullish. During the last five trading days, the German DAX increased by 2.3%, the French CAC40 grew by 1.6% and the British FTSE250 soared by 0.7%. In the US, the DJI and the S&P500 rose by 0.4%, whereas the NASDAQ fell by 0.1%. The publication of the payrolls deserved the event of the past week name. The data from the American labor market was really solid – the unemployment rate remained at 4.1%, while the non-farm payrolls amounted to 221K vs 200K projected. Nevertheless, it was not a significant bullish incentive for the investors, because the labor market in the US has been in an excellent condition for a long time. Last week, there were a lot of other macroeconomic readings from the US, the Euroland and Asia. Most of them turned out to be confirmations that the global economy was on the growth path - a fundament of a bull market. Lately, bitcoin aroused a lot of market emotions. The valuation of the cryptocurrency was growing extremely rapidly. On the other hand, there were more and more warnings and signals regarding a potential speculative bubble.

The Polish stock market indices ended the past week with moderate increases. During the whole week, the WIG20 grew by 0.8%, the mWIG40 went up by 0.2% and the sWIG80 rose by 1.1%. This time, politics was in the spotlight. The Polish parliament passed a law on the power market. The event improved the market sentiment around the energy sector. Furthermore, there was a personal change in the current government. Mateusz Morawiecki will replace Beata Szydlo as Prime Minister. After all, the announcement of Netia’s takeover by Cyfrowy Polsat deserved the news of the week name. Thus it was not surprising that the valuation of the former increased by nearly 26% . There was the MPC meeting last week as well. As expected, the interest rates remained unchanged. Interestingly, despite robust economic data, growing inflationary pressure and negative real interest rates, the council did not change its dovish attitude – the policy of the interest rates stabilization will be probably continued until the end of 2018. The week was crowned with the release of the Polish credit rating’s update by Fitch. The rating remained at the “A-“ level with a stable outlook.

This time, the meetings of the FOMC and the ECB Governing council will be the most important events of the current week. The market assumes the Fed will raise the interest rates, while the ECB will not make any decisions on the monetary policy. It is also worth paying attention to the macroeconomic data releases, especially to the PMIs for the Euroland, or the dynamics of the retail sales and the manufacturing production for the US. Moreover, there will be some meaningful political events: the EU summit and the expose of the Poland’s new Prime Minister.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The index of the largest Polish companies ended the past week in the green color, closing the Friday’s trading session at 2,408 pts. The market did not manage to return to the area of recent consolidation at 2,420-2,560 pts. Nonetheless, the psychological level at 2,400 pts. effectively stopped the declines – this has been a chance for bulls, especially since the volume of trade increased noticeable last week. On the other hand, in the case of bears’ dominance, the support level stands at 2,300 pts.

Graph 2: Energa daily. Source: Stooq

This time special attention should be paid to the one of energy companies – Energa. The share price of this entity rose by 6.7% last week. As a result, the resistance level at PLN 12.7 was broken. It should be also reiterated that the growths were the confirmation of V pattern – signal of trend reversal. What is more, the line of a medium-term downward trend was broken and the moving averages formed a golden cross pattern – a strong buy signal. Additionally, the volume of trade increased noticeable. Thus current technical image is clear bullish pattern. The nearest resistance level stands at PLN 14.4. Therefore, it is possible that the market will return to a long-term upward trend.

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

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