Summary

Last week, the global market sentiment was definitely bullish. During the whole week, French CAC40 grew by 4.1%, German DAX went up by 3.2% and British FTSE250 increased by 1.3%. In the US, the NASDAQ took off by 2.3%, the DJI soared by 1.9% and the S&P500 rose by 1.5%. The results of the first round of the presidential elections in France turned out to be a source of good moods in the financial markets. In line with market expectations, Marine Le Pen and Emmanuel Macron will be fighting for the presidential chair. Nonetheless, it cannot be ruled out that the bullish reaction of the market was only a short – term effect, especially since polls have showed that Macron have had about 20 percentage points advantage over Le Pen. As a result, France was in the background, whereas other political risk factors were in the spotlight. The relations between the US and North Korea remained tense and the American Congress was debating raising the debt limit. What is more, Donald Trump has presented a long – awaited plan of the tax system reform, however, there has been no assurance that it will be backed by the Congress. The American economy needs this reform. The annualized GDP growth rate for the first quarter of 2017 stood at 0.7% vs 1.1% projected. There was also a meeting of the ECB Governing Council last week. The bank did not make any changes in the monetary policy. In addition, Mario Draghi emphasized that the interest rates may remain low for a long period and the QE will be extended if needed. The dovish attitude of the ECB’s head has dispelled all market doubts about further shape of the European monetary policy.

The past week was also very successful for investors at Ksiazeca. The results of the French elections brought a decrease in global risk aversion. This was good news for the emerging markets, among others, for Poland. During the whole week, the WIG20 rose by 5%, the mWIG40 went up by 3.2% and the sWIG80 soared by 0.3%. This time the economic calendar was not rich. Investors learnt the unemployment rate for March. It stood at 8.1% vs 8.2% expected. The market focused on publications of the financial statements of listed companies for the first quarter of 2017. The results of Lotos and Millenium Bank exceeded market projections. On the other hand, the financial performance of mBank and WSE was quite disappointing.

Due to the long May weekend the activity of the Polish investors will be much smaller. Nevertheless, it is worth paying attention to the numerous macroeconomic data releases, for instance, to the PMIs for the Euroland and the American payrolls. Furthermore, there will be the FOMC meeting this week. The second round of the presidential elections in France will take place next Sunday (the 7th of May).

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The post – election euphoria in the financial markets has significantly changed the technical picture of the WIG20. After an unsuccessful attempt to break the upper limit of the sideways trend the market was dominated by bulls. As a result, the blue – chip index ended last week at 2,376 pts.. It is worth noting that the index tested a resistance level at 2,400 pts. as well. The volume of trade increased, whereas technical oscillators signaled a potential correction. If the index does not decline below a support level at 2,300 pts., the market will probably start a new upward wave.

Graph 2: Lotos daily. Source: Stooq

This time special attention should be paid to Lotos. During the whole last week, its share price grew by 16.7%. The stock price has been moving in an upward trend, however, after an unsuccessful attempt to break the barrier at PLN 60 the market was in a correction phase. Nevertheless, the concern from Gdansk published very good financial results for the first quarter of 2017 last week. They proved to be an argument for further growths, which were accompanied by the increased volume of trade as well. Thus, the share price broke the resistance level at PLN 60 and reached its new historical peak (PLN 62.18). A defense of this barrier will be a signal for further movements towards north.

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

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