Summary

The last week of June was a period of significant volatility and declines in the global stock markets. During the whole past week, the German DAX went down by 2.2%, the French CAC40 declined by 1.2% and the British FTSE250 fell by 0.9%. In the US, the NASDAQ deteriorated by 2.4%, while the DJI and the S&P500 dropped by 1.3%. The market stopped to ignore the protectionism policy of Donald Trump. Investors clearly saw that the decisions and the announcements of the American president were not a form of negotiations – these were real actions within a trade war which covered China, EU, or Canada. Concerns related to the global trade war found their negative reflection in the market expectations regarded further condition of the world’s economy. Attention should be also paid to the latest macroeconomic data readings. In the US, the final release of the annualized GDP growth rate for the first quarter of 2018 failed (2% vs 2.2% projected). In the Euroland, the publications of the confidence indices exceeded market expectations. Moreover, the HICP reached the ECB’s inflation target in June (2%). In the meantime, some representatives of the FOMC said the process of the monetary tightening in the US should be slowed down. It is worth adding that in recent weeks the market was pricing the scenario, assuming four interest rates raises in 2018. As a result, euro appreciated against dollar noticeable at the end of the past week.

Last week, the Polish stock market was dominated by bears as well. During the last five trading days, the WIG20 and the mWIG40 fell by 1.3%, while the sWIG80 declined by 2.7%. Unfavorable moods over the emerging markets, so the outflows of the foreign capital and the capital from the domestic mutual funds, or the uncertainty associated with the implementation of PPK – these were the main factors driving the bear market on the WSE. In such conditions, defensive companies gained attractiveness, so we chose one of them as a company of the week – Dino Polska. The last days were also successful for the shareholders of Medicalgorithmics. The company informed that it would pay the dividend. The announcement helped the stock price of the company to grow remarkable. Furthermore, investors learnt the minutes from the last meeting of the MPC. The document did not bring anything new and confirmed the hawkish attitude of the council.

The first week of July will bring many interesting macroeconomic data releases. Attention should be paid to the final readings of the PMIs for the Euroland and the US. It should be noted the manufacturing PMI will be published in Poland as well. The reading of the American payrolls will be the most important event of the week. Investors will also learn the minutes from the last meeting of the FOMC.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week of June brought a continuation of the bear market. The index of the largest Polish companies again moved towards south and ended Friday’s trading session at 2,135 pts. It is worth paying attention to the unsuccessful attempt to break the support level at 2,100 pts. The technical oscillators were decreasing, whereas they still remained in a neutral area. If the barrier is broken, the next support level will be the psychological level at 2,000 pts.

Graph 2: Dino Polska daily. Source: Stooq

In the era of the bears’ domination, the attractiveness of defensive companies increases. Thus Dino Polska deserved the company of the past week name – during the last five trading days, its share price grew by nearly 6%. The stock price has been in an upward trend. The last correction was one of the largest discounts of this company since its IPO. However, the market defended the level at PLN 96 several times and then broke the psychological barrier at PLN 100. Although the moving averages formed a death cross pattern, the stochastic oscillator indicated a buy signal. In the case of Dino Polska, the bulls seem to be strong. It cannot be ruled out that this time moving averages created an incorrect signal. The historical peak of the share price stands at PLN 112.9.

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

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