Summary

A publication of the Beige Book and a public appearance of Janet Yellen were the most important events of the past week. The speech put some uncertainty in the market. The president of the Fed confirmed plans to reduce the balance sheet of the Federal Reserve, albeit she seemed to be very cautious about further interest rates raises, as well as some other representatives of the Fed. Meanwhile, there were some rumors that Mario Draghi would announce a reduction of QE during an upcoming symposium in Jackson Hole or after a September’s ECB Governing Council meeting. Thus the market sentiment supported euro last week, especially since a hawkish attitude of the Fed had been already discounted. Nevertheless, the prospective of less and less expansive monetary policy of major central banks was not a burden for the stock markets for which the past week was very successful. The most important global stock market indices were dominated by the green color. What is more, Wall Street managed to reach another historical peaks. During the whole past week, the NASDAQ rose by 2.6%, the S&P500 increased by 1.4% and the DJI went up by 1%. In Europe, German DAX soared by 2%, French CAC40 took off by 1.8% and British FTSE250 grew by 0.1%. It is also worth paying attention to the latest macroeconomic data, especially from the US. The dynamic of the retail sales stood at -0.2% m/m vs 0.1% expected and the manufacturing production amounted to 0.4% m/m vs 0.3% projected. The preliminary reading of the University of Michigan index stood at 93 pts. – the release was 1.9 pts. lower than the market consensus. After some robust readings the data from the US once again failed. This may strengthen market uncertainty on the monetary tightening by the Fed.

The last week was also successful for the investors at Ksiazeca. During the last five trading sessions, the WIG20 increased by 2.4%, the mWIG40 grew by 2% and the sWIG80 rose by 0.1%. The negative character of the past week was XTB which share price went down by 14.5%. This was an effect of the disclosed new law on the limitation of financial leverage on the Forex. On the other hand, the growths of PGE’s and Orange’s share prices should be highlighted. The price of the latter was growing since the announcement of Play’s IPO. This time the Polish economic calendar was not rich. Investors learnt only the final reading of the CPI. The result of 1.5% y/y was in line with the market consensus.

This week, the market will focus on the latest macroeconomic data, starting from today’s data from China and the HICP inflation for the Euroland, through numerous readings from the Polish economy in the upcoming days to the releases from the US economy. After all, the meeting of the ECB governing Council will be the event of the week. Moreover, it is worth remembering that GetBack will launch its IPO on the WSE today.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

After two weeks of the WIG20 apathy which brought its movements around the psychological level of 2,300 pts., the index of the largest Polish companies finally had some more successful trading sessions. Last week, the market was dominated by bulls, so the index ended Friday’s quotations at 2,350 pts.. What is more, the volume of trade grew remarkable. Such a combination may have signaled the strength of demand. The breakthrough of the resistance level at 2,420 pts. should be considered as a buy signal, but earlier the market has to cope with the upper limit of a short–term consolidation in the area of 2,360 pts..

Graph 2:PGE daily. Source: Stooq

This time it is worth paying attention to PGE whose share price increased by 7.1% last week. After the stock price growths in the first half of the current year the market was in a correction phase which took the form of a consolidation. Nonetheless, in recent weeks the market managed to defend a very important support level at PLN 12 and then broke the resistance level at PLN 12.7. As a result, in a medium-term further increases towards the next barrier at PLN 15 cannot be ruled out. In addition, the strength of bulls was confirmed by the rising accumulation/distribution indicator, as well as the MACD oscillator which indicated a buy signal.

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

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