Summary

European indices volatility was restored on Thursday, after three days of stagnation. Then, we found out about the lack of agreement between finance ministers of the Eurozone and Greece and about positive news from the summit in Minsk. Because the result of the Greek case may be unknown at least until Monday, impact of the agreement between the leaders of Germany, France, Ukraine and Russia on the market was noticeable immediately. After the information about armistice from 15 February and plans for the withdrawal of heavy artillery from Ukraine, the DAX reacted very positively. The German index gained 1.6% only on Thursday, leaving behind the WIG with 0.5% growth. Thereby, Warsaw has once again performed worse than the developed markets. We cannot see the end of growth on the Wall Street. Despite weaker retail sales data (-0.8% m/m with a forecast of -0.5% m/m) and a growing number of applications for unemployment benefits, the S&P500 reached new historical highs on Friday.

The US index finished the week with a 2% increase. Despite a clear response to positive signals from the Ukraine, the largest European stock exchanges increased slightly less. The French CAC40 gained 1.5% and the DAX increased by 1.1%. Indices in Warsaw traditionally did not follow European exchanges. Both the WIG20 and the WIG30 ended week neutrally, decreasing respectively -0.3% and -0.4%. Smaller companies from the sWIG80 were better, with 1.1% growth. The medium-sized companies from mWIG40 ended the week with much worse outcome at the level of -0.1%.

In the current week, we will notice a continuation of summit about debt restructuring and reforms in Greece. Successful negotiations will result in another chance for Eurozone exchanges’ increases, but it is difficult to expect in reality. After Monday's lack of overseas activity, a number of important data will be traded in the coming days. The perspective of next S&P500 maximum will depend on industrial production and permissions for the construction of houses from January. The most important will be the first of above-mentioned, as in the previous month industrial production was weaker than expected. The continuation of increases on the Wall Street would require a solid data. Attention should be also paid to the Conference Board's indicator. The data exceeded the expectations of analysts last month. Fewer data will be published on domestic markets. Investors will look at the gauge of economic activity of enterprises, that is another catalyst for the growth of the WSE indices. It fell far above expectations last month. The annualized industrial production grow as much as 8.4%.

Technical analysis

Graph 1. WIG20 daily. Source: Stooq

Despite positive informations, the WIG20 showed his weakness in relation to European exchanges again. While developed markets’ exchanges were increasing significantly, the Warsaw blue chips unsuccessfully fight with the 2350 point barrier. Finishing the end of the week just below this level bode next increases. In the north, there are clear targets such as the resistance at 2375 points and the short-term downtrend line at around 2400 points. Considering the weakness of Polish indexes, test of the August lows at 2300 points still remains the realistic scenario.

Graph 2. Bioton daily. Source: Stooq

Interesting technical situation can be noticed on the Bioton’s chart, after last week's rally. The crucial for the company was Tuesday. More than 12% increase on a large volume caused breaking the resistance at 4.55 from November. Wednesday's rebound was not too significant. Increases were continued and price touched the level of 5.07. In the end, the company closed the week at 4.95, that is the August 2014 resistance. Breaking this barrier would open the way to the level of 5.14. Bears’ win would result in return to the vicinity of 4.55.

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

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