Summary

Last week, most of the major global stock indices continued their growths, whereas the market sentiment was slightly cooled down by Donald Trump. He took part in a conference which was the first one since his electoral success. Nonetheless, the famous billionaire did not live up to the expectations of the market which was looking forward to the specific announcements on the fiscal policy and infrastructure spending. This was all the more disappointing because of the fact that the Donald Trump’s election program was very controversial - it may be a fly in the ointment as well, especially if the protectionist schemes will be realized. As a result, this time dollar appreciated against euro and the stock market tone dropped slightly. In addition, investors learnt the dynamic of the US retail sales. It stood at 0.6% m/m vs 0.7% expected. During the whole week, the DJI fell by 0.4%, the S&P500 decreased by 0.1%, while the NASDAQ went up by 1%. Nevertheless, the European stock indices once again ended week in positive territory – French CAC40 and German DAX increased by 0.3% and British FTSE250 soared by 0.2%. Certainly, the latest macroeconomic data from the Euroland improved the European market sentiment. The Sentix index amounted to 18.2 pts. vs 12.5 pts. expected and the dynamic of the manufacturing production stood at 1.5% m/m vs 0.5% projected. The reading of the unemployment rate turned out to be in line with market consensus – 9.8%.

The last week brought further growths of the Polish stock indices as well. During the whole week, the WIG20 and the sWIG80 rose by 0.3%, while the mWIG40 took off by 3%. Investors learnt a December CPI. The reading was in line with the preliminary estimate – 0.8% y/y. However, despite the rapidly increasing pace of the price growth, the MPC left the interest rates unchanged last week. The council did not see any prospects for monetary tightening in 2017. Furthermore, Fitch published the latest review of the Polish credit rating. The agency kept previous note at “A-“ with a stable outlook. In the meantime, Moody’s did not present its update of the Polish credit rating. It meant that it remained at “A2” with a negative outlook. It should be noted that the market did not expect any revisions.

In the current week investors will learn a lot of significant macroeconomic data from the Euroland, the US and Poland. Moreover, it is worth paying attention to the ECB which will made a decision on the interest rates. After all, the highlight of the week will be some political events. There will be a conference with the participation of Theresa May on the Brexit’s procedure, the World Economic Forum in Davos and the Donald Trump’s swearing for the president of the US.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, growths in the blue – chip index lost their momentum clearly. However, the WIG20 managed to end previous week in the green color. Moreover, the volume of trade remained at a high level. Thus, the index at the end of Friday’s trading session stood at 2,015 pts.. On the other hand, it is worth paying attention to the overbought RSI oscillator which generated the risk of correction. It may have started in the second part of the past week when the market was dominated by bears. The nearest resistance levels stand at the psychological barrier of 2,000 pts. and around the 1,957 pts. mark.

Graph 2: KGHM daily. Source: Stooq

This time we chose KGHM as a company of the week. During the last five trading sessions, its share price grew by 13.5%. Moreover, it has come back above the psychological level of PLN 100 and it has approached the resistance level at PLN 110. The share price has been moving in an upward trend since the beginning of 2016. Perhaps, the recent increases were a continuation of the third upward wave. The dominance of bulls was also confirmed by the increased volume of trade. However, technical oscillators were overbought, so a correction cannot be ruled out – it does not mean that the potential for further growths has petered out.

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

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