Summary

The presidential election in the US was not only the highlight of the week – it was one of the most important events of the year. The choice of Donald Trump as the 45th President of the US was supposed to be this year’s black swan. Famous billionaire won the race for the White House, whereas there was not any panic in financial markets. Furthermore, last week brought significant increases of major global stock indices. In the US, the DJI took off by 5.4%, while the NASDAQ and the S&P500 went up by 3.8%. In Europe, German DAX rose by 4%, French CAC40 increased by 2.6% and British FTSE250 grew by 1%. Despite several strengths of Donald Trump’s election program, part of the postulates raised a lot of controversy – it may be a source of uncertainty in the long term. After all, investors still expected a December interest rate raise. The probability of the Fed’s hawkish decision increased to 81%. Everything pointed to the fact that there was made a lot of fuss over nothing. This time the latest economic data releases remained in the background. In the US, the preliminary publication of the University of Michigan index significantly exceeded market expectations – 91.6 pts. vs 87.5 pts.. In the Eurozone, the reading of the Sentix index did not fail. It stood at 13.1 pts. vs 9 pts. projected. However, the dynamic of the retail sales amounted to 1.1% y/y vs 1.4% expected.

The WSE was dominated by the green color as well. During the whole week, which exceptionally last four days (due to the Independence Day the Polish stock market was closed on Friday), the WIG20 rose by 2.2%, the mWIG40 grew by 1.5% and the sWIG80 soared by 0.7%. The favorable market sentiment was the result of the global bullish market tone. Investors learnt a lot of quarterly financial statements of companies listed on the WSE. Among the entities whose financial results surprised positively there were PKO BP, Wawel and KGHM. Moreover, it is worth paying attention to the financial performance of JSW – this year its share price has been one of the most outstanding on the Polish stock market. In the third quarter of 2016 the company made a loss much higher than the market consensus. Nevertheless, the share price rose rapidly and reached another local peak. There was also a meeting of the MPC last week. The interest rates remained unchanged.

In the current week the economic data releases should be in the center of investors’ attention. In the Euroland, there will be publications of data on inflation, the ZEW indices and the dynamic of the manufacturing production. What is more, there will be plenty of economic readings from the US. Investors will learn the dynamics of the manufacturing production and the retail sales, the CPI and the Philadelphia Fed index. It is also worth paying attention to the publications from Poland e.g. the GDP growth for the third quarter of 2016, the CPI and the dynamic of the wages.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

In the first part of the week the WIG20 did not report any significant movements. The market situation changed on Thursday. After the dynamic growths at the beginning of the day, the blue – chip index squandered them. Nonetheless, the index ended Thursday’s trading session in positive territory (0.34%). The volume of trade was really high. As a result, the market defended the support level at 1,755 pts. (61.8% Fibonacci retracement). The WIG20 ended the last week near the psychological level of 1,800 pts.. This means that the index may begin a second growth wave. The potential resistance level stands at 1,868 pts.

Graph 2: KGHM daily. Source: Stooq.

This time KGHM deserved the company of the week name. During the whole week, its share price grew by 23%. Lately, the price of copper was rising. Moreover, the company published its quarterly financial results which turned out to be higher than projections. Thus, the market sentiment was bullish - the share price of KGHM rose rapidly, formed a price gap and broke the psychological barrier of PLN 80. There was increased volume of trade as well. The course could have started the third growth wave. A potential resistance level stands at PLN 98. However, a correction can be expected – the RSI oscillator indicated overbought.

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

This material is intended to be for informational purposes only and does not constitute any investment, legal or tax advice or any other type of advice nor constitute an offer according to the Civil Code or a public offer within the meaning of the Act on Public Offering. MM Prime TFI SA has done due diligence to ensure that the information contained in this presentation is accurate and based on reliable sources. MM Prime TFI SA is not responsible for the accuracy and completeness of the information, nor for any damage that may arise from the use of it. Nothing in this document should be construed as an investment advice. The use of this material as the basis or evidence to make an investment decision takes place at the sole risk of the person who takes such a decision. This material is available free of charge.