Summary

Last week the releases of the FOMC’s and the ECB’s minutes from March meetings were in the spotlight. Fed’s members turned out to be dovish. However, this fact was not a surprise for the market which expected only one interest rate hike in the next 12 months. A dovish attitude was presented by the representatives of the ECB as well. They reiterated their readiness to take appropriate actions to restore the dynamic of price growth to 2%. Investors also learnt many important economic data. In the Eurozone, the reading of the unemployment rate and the retail sales did not disappoint investors. Nonetheless, the publications of the Sentix index and the services PMI failed. In the US reported the negative dynamic of the factory orders. On the other hand, the release of the ISM non - manufacturing index exceeded market expectations. Investors also learnt the level of the crude oil inventory. Surprisingly, it went down slightly. As a result, the price of black gold increased by more than 8%. It is worth paying attention to the publication of the services PMI in China as well. The index stood at 52.2 pts. in March vs 51.2 pts. in February. Nevertheless, the market sentiment was bearish. In the US, the DJI fell by 1.3%, the S&P500 and the NASDAQ decreased by 1.2%. In Europe, German DAX declined by 1.8%, French CAC40 went down by 0.4% and British FTSE250 deteriorated by 0.1%.

The first week of April was not successful for the investors at Ksiazeca. The indices liked the red color – the WIG20 fell by 2.7%, the mWIG40 went down by 0.7% and the sWIG80 declined by 0.1%. Previous week was not rich in economic data readings. Nevertheless, it should be noted that Moody’s rating agency warned Poland against the lowering of the credit rating. Moody’s paid attention to the dispute over the Constitutional Court which could have had a negative impact on the country’s attractiveness for foreign investors. The highlight of the week was the MPC meeting. The interest rates remained unchanged. Board members did not seem to be doves, whereas on the other hand, they were not in favor of increasing the level of interest rates as well.

In the second week of April, the readings of economic data from China will be in the spotlight. Investors will learn: the balance of payments, the dynamic of the industrial production and the retail sales, the GDP growth in the first quarter of 2016. Moreover, there will be a publication of the industrial production growth rate in the US and the Eurozone. Investors will also learn the dynamic of American retail sales. Furthermore, it is worth paying attention to the release of the CPI inflation in the Eurozone and Poland. The current week will bring a publication of Polish balance of payments as well.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

Last week, the WIG20 was dominated by bears. The only day which brought an increase of the index was Friday. Thus, the WIG20 did not break the support at 1,900 pts.. Nevertheless, the upward trend line was overcome. In addition, the MACD oscillator indicated a sell signal. On the other hand, negative signals were not confirmed by the volumes which were quite low last week. It seemed that there was an uncertainty in the market. The coming days may bring a consolidation. The breakthrough of the psychological support of 1,9000 pts. can be a strong signal for further growths.

Graph 2: Kania daily. Source: Stooq.

This time it is worth paying attention to Zaklady Miesne Henryk Kania. During the whole week, the share price increased by 4.4%. The course has been in an upward channel since the second part of January. There was a test of the resistance at PLN 2.44 last week. The breakthrough may cause further movements towards the next resistance at PLN 2.77. The RSI oscillator was neutral, whereas it may indicate a sell signal soon. Nonetheless, the upward trend seems to be clear. After a possible correction, the continuation of the current trend can be expected. A recommendation to buy with the target price of PLN 4.09 can be an incentive.

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

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