Summary

Last week, the Fed was in the spotlight, especially public appearances of its representatives. These turned out to be hawkish. For instance, Janet Yellen said that too long delay in the interest rates raise might be imprudent. As a result, the probability of further hawkish decisions increased. Nevertheless, there was still considerable market uncertainty associated with the announcements of Donald Trump. Investors waited for a specific project on the reform of the tax system and the first decisions on the infrastructure spending. After all, the condition of the American economy was really solid, so the market expectations concerning the interest rates raise seemed to be justified. The situation of the labor market was extremely good and the CPI increased to the highest level for five years – 2.5% y/y. Last week, investors learnt also some macroeconomic data from the Eurozone. However, this time they failed. The GDP growth for the fourth quarter of 2016 amounted to 1.7% y/y vs 1.8% expected. Furthermore, the dynamic of the manufacturing production stood at -1.6% m/m vs -1.5% projected. Nonetheless, the European stock market sentiment was rather bullish. During the whole week, French CAC40 and German DAX rose by 0.8%, while British FTSE250 lost a symbolic 0.04%. In the US, the NASDAQ and the DJI went up by 1.8% and the S&P500 grew by 1.5%.

This time the market sentiment on the WSE deteriorated slightly, whereas the bulls continued to be a dominant party. During the whole week, the WIG20 took off by 1.6%, the mWIG40 fell by 0.2% and the sWIG80 rose by 0.3%. Investors focused on the latest macroeconomic data, which proved to be robust. The GDP growth for the fourth quarter of 2016 stood at 2.7% y/y vs 2.5% projected. What is more, the CPI increased extremely dynamically to 1.8% y/y. The result was higher than the market consensus and the NBP projection. Moreover, data on the dynamics of the retail sales (11.4% y/y) and the manufacturing production (9% y/y) did not fail – they significantly exceeded market expectations. There were plenty of indications that the Polish economy accelerated. Investors learned another financial statements of companies listed on the WSE as well. It is worth paying attention to the results of BZ WBK, which in the year 2016 turned out to be worse than those of 2015.

The current week, apart from slightly less numerous macroeconomic data readings, will also bring many publications of the listed companies’ financial statements. In addition, the issue of the economic situation in Greece will return. This will be a main topic during the meeting of the EU ministers of finance.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, the WIG20 was once again dominated by bulls. As a result, the blue – chip index broke the resistance level at 2,200 pts.. However, the strength of demand was insufficient for the index to keep above this level. Thus, the WIG20 ended last week at 2,188 pts.. After such a long period of growths a correction can be expected. It was signaled by the overbought RSI oscillator. If in the coming days, the market does not try to break the level of 2,200 pts. or if the potential attempt ends in failure, it will be a signal of the correction beginning.

Graph 2: Rainbow Tours daily. Source: Stooq

This time Rainbow Tours deserved the company of the week name. During the last five trading sessions, its share price grew by 12.4%. It should be noted that the stock price has moved in an upward trend. However, after the breakthrough of the resistance level at PLN 30, the dynamic of growths accelerated significantly. As a result, the share price reached its new historical peak. The RSI oscillator was overbought, whereas the MACD oscillator indicated a buy signal. Perhaps, after a possible correction, the market will return to further increases.

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

This material is intended to be for informational purposes only and does not constitute any investment, legal or tax advice or any other type of advice nor constitute an offer according to the Civil Code or a public offer within the meaning of the Act on Public Offering. MM Prime TFI SA has done due diligence to ensure that the information contained in this presentation is accurate and based on reliable sources. MM Prime TFI SA is not responsible for the accuracy and completeness of the information, nor for any damage that may arise from the use of it. Nothing in this document should be construed as an investment advice. The use of this material as the basis or evidence to make an investment decision takes place at the sole risk of the person who takes such a decision. This material is available free of charge.