Summary

The last week was marked by the small volatility and the calm trade on the global financial markets. Of course, there were some interesting economic events and controversial statements by Donald Trump, however, these did not have a major impact on the stock market indices. Jerome Powell presented a half-year report on the Fed’s monetary policy. During the speech, the bank’s chief expressed his optimism about the further condition of the American economy and confirmed the Fed’s readiness to continue the process of the monetary tightening. Nevertheless, the market had already discounted the increasingly hawkish attitude of the bank. On the other hand, Donald Trump criticized the Fed’s monetary policy and announced the US may extend the scale of protectionism. Surprisingly, the commentaries did not have a significant impact on the market. A slight increase in the tension could have been seen on the Eurodollar price graph – the EUR/USD rose dynamically after Trump’s words, whereas it remained in a consolidation. During the last five trading days, the DJI grew by 0.15%, the S&P500 went up by a symbolic 0.02% and the NASDAQ declined by 0.07%. In Europe, the British FTSE250 soared by 0.54%, the German DAX increased by 0.16%, while the French CAC40 fell by 0.57%.

The Polish market was dominated by the green color, however, the scope of the increases was quite small. During the whole past week, the WIG20 rose by 1.2%, the mWIG40 soared by 0.14% and the sWIG80 went up by 0.35%. It was another successful week for the shareholders of CD Projekt, despite the sale of a large block of shares by the head of the company’s supervisory board. Moreover, the share price of the video games developer broke the psychological level at PLN 200. Attention should be also paid to PKN Orlen. The entity published strong financial figures for the second quarter which exceeded market projections. Furthermore, the company informed that it was not working on the project of the nuclear power plant building. Thus the valuation of the company increased noticeable last week. On the other hand, the stock price of PGNiG shrank remarkable last week. The company will not pay a dividend for 2017. The decision was negatively received by individual and institutional investors. In addition, investors learnt some macroeconomic data for June. The dynamics of the retail sales (+10.3% y/y), the manufacturing production (6.8% y/y) and the wages (7.5% y/y) were higher than expected.

This week, there will be releases of the preliminary PMIs from the US and the Euroland for July. Attention should be also paid to the publications of the German Ifo index and the American GDP growth rate for the second quarter. After all, the meeting of the ECB Governing Council will be the most important point in the economic calendar. The event will be crowned with a press conference with the participation of Mario Draghi.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The index of the largest Polish companies ended the last week at 2,182 pts. It was not a domination of bulls, whereas the demand gained an advantage. The volume of trade increased, but it was still relatively low. The market defended the support level at 2,100 pts. and it was preparing to the test of the resistance level at 2,200 pts. What is more, due to the proximity of a downward trend line and the specificity of a holiday season, the investors’ activity remained low.

Graph 2: PKN Orlen daily. Source: Stooq

This time, we chose PKN Orlen as a company of the week. During the last five trading sessions, the stock price of the concern from Plock grew by 10.05%. The strength of demand was confirmed by a clear increase in the volume of trade. The stock price has been in a consolidation with limitations at PLN 77 and PLN 90 for a few months. The neutral values of the technical oscillators build space for further growths of the Orlen’s value. As a result, an attempt to break the upper limitation of a sideways trend cannot be ruled out in the near future, especially as the market sentiment over the company has improved considerable after the last publication of strong fundamental data. In the case of success, the psychological level at PLN 100 will be the next target for the market.

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

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