Summary

The past week brought increases in the most important stock market indices, although its beginning was marked by anxiety and uncertainty. This time a trade war was not the main source of the risk. Investors’ attention was focused on Syria. The Donald Trump’s tweets contributed to the increase in concerns related to the intensification of the ongoing war in this region which may have led to the escalation of the conflict between the US and Russia. Subsequently, next tweets of the US President calmed investors down. In fact, it does not seem these two world powers want to start an armed conflict. After all, Trump’s warnings were reflected in the Saturday’s missile attack on Syria. Last week, investors learnt the minutes from the last meetings of the FOMC and the ECB Governing Council. The American document confirmed the Fed’s hawkish attitude. Nonetheless the basis scenario remained unchanged: in 2018, two more interest rates raises should be expected in the US. On the other hand, the European minutes seemed to be much more dovish. Perhaps, QE will be completed this year, however, the prospect of the increase in the cost of money is still quite distant.

The Polish stock market was also dominated by the green color last week. During the last five trading days, the WIG20 rose by 2.3%, the mWIG40 did not change its value, whereas the sWIG80 grew by 0.6%. GetBack once again deserved the negative hero of the week name (-23.7%). Bioton was on the other side – we chose this entity as a company of the week. The distributor and producer of the biotechnological drugs published its financial results for 2017 which were definitely higher than projected – a significant reduction of losses. The last week was quite fulfilling for the shareholders of PlayWay as well. The company announced an extremely successful debut of a new production. There was also a meeting of the MPC last week. As expected, the interest rates remained unchanged, so investors focused on the conference with Adam Glapinski. The president of the NBP again suggested that the dovish monetary policy may be continued even within the next two years. This time these words were not a surprise for the market, so the banks’ index ended the past week in positive territory. It is also worth adding S&P rating agency raised Poland’s outlook from neutral to positive last week. The institution did not change the level of the Polish credit rating (BBB+).

In the coming days, the policy will probably remain in the center of attention. However, there will be some important macroeconomic data releases as well. Investors will learn the HICP for the Euroland, or the dynamics of the retail sales and the manufacturing production for China and the US. In Poland, there will be publication of data on the employment and wages, and the manufacturing production growth rate.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

In the first part of the past week the market uncertainty was reflected in the lateral movements of the WIG20. Nevertheless, its second part brought an improvement in the market sentiment, thereby the WIG20 movements towards north. Thus the blue-chip index ended the past week at 2,310 pts. and broke a line of a short-term downward trend. Furthermore, the market rebounded from a very important support level at 2,220 pts. The volume of trade increased as well. For bulls, a breakthrough of the barrier at 2,400 pts. seems to be a key issue.

Graph 2: Bioton daily. Source: Stooq

This time special attention should be paid to Bioton. Last week, the share price of this entity increased by nearly 33% - the publication of the financial results positively surprised investors. The stock price was in a downward trend for a couple of years. However, recent months have brought a clear trend’s reversal. A line of the downward trend was broken and the volume of trade increased. The nearest resistance level stands at PLN 6. A breakthrough will open the way to movements towards the barrier at PLN 8. On the other hand, it is worth paying attention to the overbought technical oscillators. After dynamic increases of the stock price, part of the market may decide to realize its profits.

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.