Summary

Emotions related to the American elections subsided clearly. Nevertheless, most of major global stock indices ended last week in positive territory. In the US, the NASDAQ rose by 1.6%, the S&P500 soared by 0.8% and the DJI increased by 0.1%. In Europe, British FTSE250 took off by 1.2%, French CAC40 went up by 0.3% and German DAX fell by 0.03%. There were a lot of significant movements in the bond markets and the foreign exchange market. An increase in risk aversion contributed to the sell – off of the treasury bonds on the global market. In addition, during the speech in the American Congress Janet Yellen reiterated that the decision concerning the interest rates raise should be made in the near future. Everything indicated that the Fed would tighten the monetary policy on December. Thus, dollar appreciated significantly against other currencies, particularly against the currencies of emerging markets (including Polish zloty). Once again, the macroeconomic data readings remained in the background. This time some of the releases from the American economy failed e.g. the dynamic of the manufacturing production (-0.9% y/y) and the Philadelphia Fed index (7.6 pts.). These readings turned out to be lower than projections. On the other hand, the retail sales growth rate amounted to 0.8% y/y vs 0.6% expected. Investors learnt the GDP growth for the Euroland as well. The result of 1.6% y/y was in line with market consensus.

Unlike to major global stock indices, the WSE was dominated by the red color. During the whole week, the WIG20 fell by 1.6%, the mWIG40 declined by 0.7% and the sWIG80 went down by 1.5%. Unfavorable market sentiment was not only the result of global market tone – the internal factors did not support the Polish stock market as well. First of all, the latest economic data readings failed. The GDP growth for the third quarter of 2016 stood at 2.5% y/y vs 2.9% expected. It was the lowest reading for three years. In contrast, the CPI rose from -0.5% y/y to -0.2% y/y. Furthermore, the political decisions turned out to be a burden for the WSE. Parliament adopted the law on lowering the retirement age. The reform was contrary to the demographic trends and it may have an adversely impact on the condition of the Polish economy. Moreover, the issue of OFE liquidation reoccurred in the public debate.

In the current week attention should be paid to the numerous macroeconomic data readings from the Euroland and the US. Investors will also learn a lot of data from the Polish economy e.g. the dynamics of the manufacturing production and the retail sales, the PPI and the unemployment rate. There will also be publications of the minutes from the last meetings of the MPC and the FOMC. It is worth remembering that the US stock markets will be closed on Thursday (Thanksgiving Day). Moreover, they will be closed earlier than usual on Friday (Black Friday).

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The technical picture of the WIG20 seemed to signal the beginning of a bull market. However, this form of analysis could not have been effective, because political decisions determined the market sentiment. As a result, the blue – chip index was dominated by bears and ended last week at 1,725 pts.. The RSI oscillator declined rapidly and remained neutral. The nearest support level stands at 1,705 pts.. Its breakthrough will be a signal for further movements towards this year’s hole (1,641 pts.). Otherwise, the market may return to a sideways trend.

Graph 2: Integer daily. Source: Stooq.

In the past week, the shareholders of Integer had a lot of reasons to be glad. During the whole week, its share price increased by 10.8%. Compared with the performance of the entire Polish stock market, it was an outstanding result. After dynamic declines the course rebounded. Thus, the share price was in the short – term upward trend. It is worth paying attention to the increased volume of trade as well. After all, the resistance level at PLN 38 effectively stopped further increases. Potential declines may confirm a double top pattern – a strong signal of a trend reversal.

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.