Summary

In the first part of the past week investors were looking forward to the Fed’s decision on the interest rates. Most of them did not expect any hawkish changes because plenty of economic data readings from the US had failed. However, the earlier appreciation of dollar against euro could have indicated that the market did not rule out a possible change of the cost of money. Nevertheless, the FOMC did not modify its monetary policy. As a result, global major stock indices started to grow dynamically, especially in the US. Thus, the market consensus assumed that the interest rate raise would take place in December. During the whole week, the NASDAQ and the S&P500 increased by 1.2% and the DJI rose by 0.8%. In Europe, French CAC40 took off by 3.6%, German DAX grow by 3.4% and British FTSE250 soared by 0.4%. Attention should be paid to the latest data from the Eurozone as well. The dynamic of the construction orders stood at 3.1% y/y vs 2.3% projected. Investors also learnt the preliminary PMIs. The manufacturing PMI amounted to 52.6 pts. vs 51.5 pts. expected, while the services PMI stood at 52.1 pts. against market consensus at 52.8 pts..

This time the Polish stock indices ended week in positive territory – the WIG20 increased by 1.6%, the mWIG40 grow by 1.3% and the sWIG80 rose by 0.4%. Furthermore, the national economic calendar was really interesting. Investors learnt a lot of economic data which confirmed the robust growth of the Polish economy. The manufacturing production growth rate stood at 7.5% y/y, while the dynamic of the retail sales amounted to 5.6% y/y. Moreover, the unemployment rate stood at 8.5% in August. The result was lower by 0.1 percentage point than in July. There was also a publication of the minutes from the last meeting of the MPC. The council seemed to be divided on the issue of further monetary policy. There were plenty of indications that in the near future the cost of money would be unchanged. It is worth paying attention to the political stage as well. It turned out to be a burden to the largest Polish companies listed on the WSE. The announcements concerning the increase of the nominal value of energy companies’ shares had adversely impact on their quotations.

Current week will bring a lot of significant economic data readings from major economies. Special attention should be paid to data from the US: the Conference Board index, the Richmond Fed index, the Chicago PMI, the dynamic of the durable goods orders and the GDP growth rate for the second quarter of 2016. In the Eurozone, there will be publications of the confidence indices and the unemployment rate.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The WIG20 ended last week at 1,762 pts. and broke the line of the long – term downward trend. Nonetheless, the market situation remained unchanged. The scale of growths was still quite small. The market seemed to be ready to rebound, whereas due to the unfavorable fundamental and political factors, many blue – chip’s share prices moved towards south. The RSI oscillator remained neutral. The nearest resistance level stands at 1,800 pts.. However, the breakthrough of the 1,870 pts. mark will probably start an upward trend.

Graph 2: Eko Export daily. Source: Stooq

Last week ones of the most distinguishing shares were those of Eko Export. During the whole past week, the share price increased by 27%. After the golden cross pattern had been formed, the share price started to move towards north dynamically. Furthermore, the increases were accompanied by a very high volume of trade. The RSI oscillator indicated overbought, so in the near future a correction can be expected. This will probably end the second upward wave. Subsequently, the share price may rise once again. The nearest resistance level will stand at PLN 20.4.

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

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