Summary

Last week did not bring significant changes in the major global stock indices. In the US, the NASDAQ rose by 0.8%, the S&P500 increased by 0.4%, while the DJI soared by 0.04%. In Europe, French CAC40 took off by 1.5%, German DAX went up by 1.2% and British FTSE250 fell by 0.3%. The meeting of the ECB Governing Council was the highlight of the week. In line with market consensus, the interest rates remained unchanged. However, investors expected that Mario Draghi would announce an expansion of the QE. Meanwhile, it turned out that the council did not consider the issue. Moreover, the president of the ECB emphasized that the program would not soon be concluded. Generally, the message was rather dovish, whereas not enough to meet market expectations. There was also a debate between Hilary Clinton and Donald Trump last week. The famous billionaire was defeated once again – it was quite good information for financial markets. In addition, investors learnt some data from the American economy. The manufacturing production growth rate amounted to 0.1% m/m vs 0.2% expected. Special attention should be paid to the reading of the Philadelphia Fed index which significantly exceeded projections – 9.7 pts. vs 5.8 pts.. There were also some publications from the Chinese economy. In line with market consensus, the reading of the GDP growth stood at 6.7% y/y. Nonetheless, the dynamics of the manufacturing production and the retail sales amounted to 6.1% y/y and 10.7% y/y vs 6.4% and 10.6% expected.

Investors learnt the latest data from the Polish economy as well. The dynamic of the retail sales stood at 4.8% y/y vs 6% expected. Furthermore, the manufacturing production growth rate amounted to 3.2% vs 3.45% projected. What is more, the minutes from the last meeting of the MPC were released. The council did not intend to make changes in the monetary policy. Nevertheless, during the meeting the members talked about a possible increase in interest rates (in the case of rising inflation). After all, during the whole week, the WIG20 grew by 1.9%, the mWIG40 went up by 1%, whereas the sWIG80 deteriorated by 0.04%. In addition, Celon Pharma and PlayWay launched their IPOs last week.

In the current week attention should be paid to the latest data from the Eurozone: the preliminary PMI’s and the confidence indices. What is more, investors will learn a lot of data from the US e.g. the GDP growth for the third quarter of 2016, the dynamic of the durable goods orders, the Conference Board index and the Richmond Fed index. Moreover, the earnings season is gaining momentum.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week brought an increase in the WIG20. Thus, it ended Friday’s quotations at 1,752 pts.. In fact, the blue – chip index moved towards north only on Wednesday, whereas it did not report any significant changes during the remaining trading sessions. The RSI oscillator remained neutral. The WIG20 has been in a sideways trend since May. However, it managed to defend the psychological level of 1,700 pts. three times. Therefore, it cannot be ruled out that the market sentiment will soon improve.

Graph 2: Enea daily. Source: Stooq

This time we chose Enea as a company of the week. During the last five trading sessions, its share price increased by 8.2%. Moreover, the course temporarily broke the psychological level of PLN 10. Before that, the growths had been signaled by the MACD and the RSI oscillators. In addition, it is worth paying attention to the increased volume of trade. Nonetheless, the share price was still in a downward trend. If another test of the resistance level of PLN 10 is successful, the market will probably try to break the line of the long – term downward trend. However, much will be depend on politicians. Thus far, their decisions adversely affected stock prices in the energy sector.

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

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