Summary

Last week global stock exchanges entered bull – market territory after three negative weeks in a row. In the US, the DJI and the NASDAQ rose by 1.8% and the S&P500 increased by 1.6%. In Europe, German DAX and French CAC40 went up by 4.5%. Slightly worse result was reached by British FTSE250 – the index soared by 0.5%. Among of many economic data readings in the US, the publications of the CPI and the PPI should be distinguished. The former amounted to 0.9% y/y and the latter -0.1% y/y. The indices were lower than the market expectations. Moreover, the low levels of the price growth could have confirmed a dovish FOMC’s attitude. Investors also learnt quite weak dynamics of the industrial production (-2% y/y) and the retail sales (1.7% y/y). In the Eurozone, the reading of the CPI surprised positively – it stood at 1.2% m/m. It is worth paying special attention to the economic data from China. The GDP growth in the first quarter of 2016 stood at 6.8% y/y. Furthermore, the dynamics of the industrial production and the retails sales amounted to 6.8% y/y and 10.5% y/y. The releases of the PPI and the balance of payments did not fail as well. It should be also noted that oil producers held a meeting on Sunday. However, an agreement on a production limit was not concluded. Thus, upcoming days may bring a decline of the black gold price.

Last week Polish indices moved towards north as well – the WIG20 increased by 1.1%, the mWIG40 took off by 1.4% and the sWIG80 grew by 0.7%. Previous week did not bring a lot of economic data readings. Nevertheless, investors learnt the CPI which stood at -0.9% y/y in March vs -0.8% y/y in February. It may encourage the MPC to loosen the monetary policy. A dovish standpoint was confirmed by some members of the council as well. They were in favor of lowering the interest rates in the next few months. In addition, it is worth paying attention to the publication of the balance of payments. This time Poland did not record trade surplus.

In the current week, the ECB will be in the spotlight. The Governing Council will make a decision on interest rates. Moreover, there will be publications of the ZEW indices and the consumer confidence index in the Eurozone. Investors will also learn the values of the preliminary PMI indices. In the US, it is worth paying attention to the reading of the leading indicators index and to the data on real estate market. What is more, there will be a lot of economic data releases from Poland. Investors will learn the dynamics of the industrial production and the retail sales, the PPI and the level of wages. Moreover, there will be a publication of the MPC’s minutes from the last meeting.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week brought a low level of volumes again. Nevertheless, the WIG20 approached the psychological level of 2,000 pts.. The value of the index at Friday’s market close stood at 1,939 pts.. The RSI oscillator was neutral. The market seemed to be indecisive. It waited for a signal which could have given its a clear direction. If the signal does not appear, there will probably be a consolidation between the resistance at 2,000 pts. and the support at 1,900 pts. The breakthrough any of these barriers will unlikely change the market tone.

Graph 2: JSW daily. Source: Stooq

JSW deserved the company of the week name. During the whole week, its share price increased by 23.2%. The course has been in an upward channel since the beginning of the February. Last week’s growths were begun exactly on the day of the recommendation’s issue to buy with a target price of PLN 15.6. Surprisingly, the share price ended the week precisely at this level. Until then, the course had tried unsuccessfully to break the resistance at PLN 16.4. The RSI oscillator pointed out the overbought. Therefore, upcoming sessions may bring a correction. The next support stands at PLN 14. Nonetheless, recent increases may indicate a growth potential of the low - priced shares.

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

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