Summary

The last days of 2017 brought small declines in the most important global stock markets. During the whole week, the NASDAQ went down by 0.8%, the S&P500 decreased by 0.4% and the DJI declined by 0.1%. In Europe, the German DAX fell by 1.2% and the French CAC40 deteriorated by 1%. Unlike to them, the British FTSE250 grew by 1.2%. After all, it should be reiterated that the last year was very successful for investors – a bull-market brought new historical peaks on Wall Street and many European stock market indices. There were not a lot of market emotions last week - the economic calendar was not rich. However, it is worth paying attention to the macroeconomic data from the US. The reading of the Conference Board index was quite disappointing – 122.1 pts. vs 128.1 pts. projected. On the other hand, the Chicago PMI amounted to 67.6 pts. vs 62.5 pts. expected. In fact, these releases did not have any impact on the market, because the condition of the American and the whole global economy has been really solid for a long time. Lately, the increases in the commodity market were seen as well. Actually, this trend has been maintained since mid-2017 and it confirms that the global economy growth rate has accelerated. The higher prices of commodities have had a negative impact on the dollar’s valuation. Last week, the American currency depreciated against the European currency by 1.2%. During the whole past year, dollar depreciated against euro by nearly 14.4%.

The last week was quite fulfilling for the investors at Ksiazeca - the WIG20 rose by 0.6%, the mWIG40 soared by 1.3% and the sWIG80 went up by 1.4%. The year 2017 will be remembered as a period of a bull-market in the case of the largest Polish companies, the time of a sideways trend in the case of medium-sized companies and the time of a bear-market in the case of small entities. Last week, three new companies launched their IPOs on the WSE: R22, Tower Investments and Hollywood. Earlier, the last two had been listed on NewConnect. In total, there were 15 stock market debuts in 2017 – four less than in 2016. The past week brought an appreciation of zloty against dollar and euro as well. In fact, the year 2017 was very successful for the Polish currency. During the whole past year, it appreciated by 17.1% and 5.2% against these foreign currencies.

In the current week investors will return after a holiday break, so the growth in the volatility and the volume of trade should be expected. The first week of 2018 will bring a lot of macroeconomic data releases. There will be the readings of the PMIs for the Euroland, China and the US. Investors will learn the manufacturing PMI for Poland as well. The publication of the American payrolls deserved the event of the week name. It is also worth paying attention to the publication of the minutes from the last meeting of the FOMC.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week of the year, which lasted only three days on the Polish capital market, did not change the technical situation of the blue-chip index. The WIG20 remained in a consolidation with limitations at 2,370 pts. and 2,560 pts. However, the index of the largest Polish companies ended the past week with the slight increases. As a result, its value at the Friday’s trading session close stood at 2,461 pts. Due to the holiday period, the volume of trade was still quite low.

Graph 2: Wirtualna Polska daily. Source: Stooq

We chose Wirtualna Polska as a company of the week. During the last three trading sessions, the share price of the entity grew by 6.6%. It rebounded from a local low peak in November. At that time, the moving averages formed a golden cross pattern – a strong buy signal. As a result, the stock price has been moving in an upward trend. However, the psychological resistance level at PLN 50 turned out to be too challenging barrier for the market. It is also worth noting that technical oscillators were in a buyout area, so investors may soon decide to realize their profits. Nevertheless, the upward technical pattern seems to be strong. Thus after a potential correction the market may try to break the barrier at PLN 50 once again. In the case of success, another resistance level stands at PLN 54.

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

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