Summary

The first week of March brought significant increases in the most important stock market indices. During the whole past week, the NASDAQ rose by 4.2%, the S&P500 grew by 3.5% and the DJI soared by 3.3%. In Europe, the German DAX and the British FTSE250 went up by 3.6%, while the French CAC40 increased by 2.7%. The meeting of the ECB Governing Council deserved the event of the week name. In line with the market consensus, the European monetary policy was not changed. The bank’s message seemed to be clear and unsurprising: QE may be extinguished gradually, whereas the interest rates would remain at the current level in a longer term, significantly exceeding the time horizon of the asset purchase program. This has been quite good news for the European equity markets, especially as the condition of the global economy has been really robust and the attitude of the Fed has been quite hawkish. Last week, the market sentiment was supported by the publication of the American payrolls as well. The unemployment rate remained at 4.1%, whereas the non-farm payrolls definitely exceeded a market projection - 313K vs 200K expected. On the other hand, the dynamic of the hourly wage again failed – 2.6% y/y vs 2.8% y/y expected. This has been very good news for the investors – the economic condition of the US has been still improving, while the increase in wages has not been generating significant inflationary pressure which could induce the bank to adopt more hawkish attitude.

The WSE was also dominated by the green color, however, the scope of increases once again was definitely lower than in the Western stock markets. During the whole past week, the WIG20 grew by 1.7%, the mWIG40 rose by 2.8% and the sWIG80 went up by 0.1%. The past days were not successful for the banking sector which was adversely affected by the dovish attitude of the MPC. Although the council did not make any changes in the monetary policy, Adam Glapinski stated that based on the latest inflation’s projections he did not see any reasons to raise interest rates until 2020. Last week, the market valuation of GetBack once again declined noticeable – an effect of the new share issue. Meantime, another Polish leading debt collector company (Kruk) was on the other side. The entity informed about an increase in the dividend and announced its willingness to participate in a consolidation of the market.

In the current week, the data on the inflation in the US, EU and Poland will be in the spotlight. Investors will also learn the dynamics of the retail sales and the manufacturing production in the US, as well as data on the wages and the employment in Poland. In addition, there will be plenty of financial statements’ publications by companies listed on the WSE. The financial results for 2017 will be presented by JSW, PKO BP, Tauron, LPP, PGNiG, KGHM, or PZU, among others.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, the value of the blue-chip index rose to 2,354 pts. In line with our expectations, the WIG20 rebounded from a key level at 2,300 pts. The volume of trade increased and confirmed the strength of bulls. Nevertheless, the resistance level around 2,360 pts. (a lower limitation of the recently completed consolidation) turned out to be too demanding barrier for the market. Despite the successful week, the situation of bulls has remained quite difficult. A continuation of an upward pattern requires at least a breakthrough of the resistance levels at 2,360 pts. and 2,400 pts.

Graph 2: Krezus daily. Source: Stooq

We again chose Krezus as a company of the week. During the whole past week, the value of the enterprise rose by almost 35%, despite the lack of new fundamental information. The share price has been moving in a clear medium-term upward trend. The dominance of bulls has been confirmed by the high volume of trade and increasing value of the accumulation/distribution oscillator. The stock price stopped near the resistance level at PLN 4. The overbought technical oscillators suggest that a correction may soon come. On the other hand, a similar situation occurred when the share price fluctuated near PLN 3 mark, so another technical trap cannot be ruled out.

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

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