Summary

The highlight of the past week was the British referendum. In the first part of the week the market sentiment was bullish because investors believed that the Great Britain would remain in the EU. Nonetheless, Friday’s results of the referendum showed the advantage of the Brexit’s supporters. As a result, major stock indices started to fall dynamically. During the whole week, French CAC40 declined by 2.1%, British FTSE250 fell by 2% and German DAX deteriorated by 0.8%. In the US, the NASDAQ decreased by 1.9%, while the S&P500 and the DJI went down by 1.6%. It is worth noting that the weekly results did not reflect the scale of the Friday declines – some indices slipped by 8%. Last week there were public appearances of the ECB’s and Fed’s presidents. Janet Yellen postponed the prospect of the interest rates raise, while Mario Draghi did not rule out further dovish changes in the monetary policy in case of Brexit. In addition, it is worth paying attention to the latest macroeconomic data. In the Eurozone there were publications of the PMIs. The manufacturing PMI stood at 52.6 pts. vs 51.4 pts. expected, while the services PMI amounted to 52.4 pts. vs 52.9 pts. expected.. Investors learnt the German Ifo index as well. It stood at 108.7 pts. vs 107.1 pts. expected. In the US, the dynamic of the durable goods orders amounted to -2.2% m/m. The reading extremely disappointed investors who expected the growth of 0.1%.

Initially, the market sentiment on the WSE was bullish as well. ‘’Black Friday” totally changed the picture of the market. During the whole week, the WIG20 rose by 0.9%, the mWIG40 went down by 2.7% and the sWIG80 fell by 1.3%. Nevertheless, on Friday, the WIG20 declined by 4.53%, the mWIG40 deteriorated by 4.93% and the sWIG80 went down by 3.23%. Of course, investors was completely focused on the British referendum. On the other hand, it should be noted that the unemployment rate in Poland stood at 9.1% in May. It was the lowest reading since November 2008. Moreover, Adam Glapinski took the oath in the Polish parliament and officially became the NBP’s president.

At the beginning of the current week, the market may still abreact the results of the British referendum. In the following days the stabilization can be expected. Investors will learn the American GDP growth for the first quarter of 2016. Furthermore, there will be releases of the Conference Board Index, the Chicago PMI and the ISM Manufacturing Index. Investors will also learn the values of the manufacturing PMIs for China, Poland and the largest EU economies.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

Investors believed in Bremain, so the WIG20 reported some increases last week. As a result, the three white soldiers pattern was formed. It was a strong buy signal. Nevertheless, the dominance of bulls was completed on Friday when the market reacted very nervously to the results of the British referendum. The WIG20 started the Friday trading session with a big bearish gap. Nonetheless, the index managed to recover some of its losses. Thus, the blue – chip index ended last week at 1,769 pts.. The RSI oscillator remained neutral. The nearest resistance level stands at 1,800 pts, while the potential support level stands at 1,700 pts.

Graph 2: Graal daily. Source: Stooq.

This time a special attention should be paid to Graal. During the whole week, the share price of the company increased by 8.4%. The course has been in a downward trend since November 2015. However, the recent dynamic growths provided the opportunity to form a “V” bottom pattern which would be a harbinger of a trend reversal. The RSI oscillator indicated a buy signal. Subsequently, it started to grow. It is worth paying attention to the MACD oscillator as well. It showed a buy signal. The nearest resistance stands at the psychological level of PLN 25, whereas a support level stands at PLN 20 (the last hole).

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

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