Summary

Last week on European stock exchanges was quite neutral. The DAX’s rise from the midweek has been confirmed only in the last hours of Friday’s trading. This means that the index has reached a new all-time high at 11 081 points. Investors uncertainty has been strengthened by Greek negotiations with Germans, who did not agree to the half year funding period proposal. Information about the agreement and staying in the Eurozone was public after the trading day. Consent to an extension of the bailout programme for four months on condition that reforms will be implemented should reduce investors' risk aversion at the beginning of this week. Warsaw indices traditionally has not even showed the desire to growth. Lack of progression in Ukraine and the weaker-than-expected data from the real Polish economy have certainly impact on the neutral situation. Industrial production grew by 1.7% y/y with forecasts at 1.8% y/y. Shorter trading week on Wall Street has not brought large weekly volatility. Statistically, we need to notice a new historical high on Thursday. The new S&P500 all-time high is 2110.61 now. Likewise in Poland, industrial production was weaker than expected. It increased by 0.2% on a monthly basis with the forecast of 0.3%.

The CAC40 with 1.5% growth fell the best last week. Slightly less gained the German DAX with 0.8% growth. Right behind in terms of growth was the S&P500 with the appreciation of 0.6%. Traditionally, Warsaw indices were weaker than European stock exchanges. Blue chips from the WIG20 and the WIG30 ended the week neutral. As in the previous week, the best were smaller companies from the sWIG80. The index grew by 1.1% last week, continuing a bull market among companies with small capitalization.

Among the macroeconomic data from the current week, we should notice the Monday’s home sales on the secondary market indicator and Tuesday's HICP inflation in the Eurozone. The Eurostat indicator was in line with market expectations previous months. Tuesday will be the day of speeches. The Fed chief, Janet Yellen, will present semi-annual report on US monetary policy in front of the US Congress. Meaning of speech expected by the market is similar to the one described in the minutes from the FOMC last week. On this day, we will also listen to the the head of the ECB, Mario Draghi’s. On Wednesday, we will look at the index of new home sales in the US. In the previous reading it was significantly higher than expected. The market will certainly expect the next strong data for US indices. The end of the week will bring CPI inflation and the Chicago PMI index from the US.

Technical analysis

Graph 1. WIG20 daily. Source: Stooq

No drivers of growth were seen on most major stock exchanges last week. The technical blue chips’ situation in Warsaw has not changed significantly comparing to the previous week. The WIG20 was around 2350 points barrier. Movement to the north will require more evident signals to the growth, because there is a forthcoming resistance of short-term downtrend line in the vicinity of 2375 points. However considering the strength of the Warsaw Stock Exchange, the most likely scenario is remaining around 2350 points.

Graph 2. Sfinks daily. Source: Stooq

The current week on the WSE belonged to the Sphinx technically. Tuesday's publication of the results allowed the company to overcome the key resistance around 2 PLN. The strength of breaking was showed by upward gap at a very high volume. Moreover, we were not witnessing taking profits next days. Finally, the company has reached the resistance level around 2.32 from August 2013 at the end of the week. In the coming days we will witness a fight for the breakdown of the barrier, that will open the way to earlier local maximum at 2.40. Retreat from this barrier will result in testing gap from the previous week as an area of support.

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

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