Summary

Despite the lack of strong bearish incentives, major global stock market indices liked the red color last week. During the last five days, the DJI went down by 1.5%, the S&P500 fell by 1.4% and the NASDAQ declined by 1.2%. In Europe, British FTSE250 decreased by 0.6%, German DAX deteriorated by 0.3% and French CAC40 shrank by 0.2%. Attention should be paid to the next pro – restrictive public appearances of the FOMC representatives, which in the eyes of investors were not hawkish enough. In addition, the initially postponed voting of the Congress on health reform was not completed – the proposed law was withdrawn due to the insufficient number of votes. This was quite bad news for the federal budget. What is more, this was a failure of Donald Trump – there was a lack of unity within the Republican Party, which may raise doubts in the context of the announced changes in the tax system. Meanwhile, in Europe, market fears on the upcoming elections in France diminished considerably. Last week’s electoral debate was not successful for eurosceptic Marine Le Pen. It is worth paying attention to the latest macroeconomic data releases as well. The preliminary readings of the PMIs for the Euroland (56.2 pts. and 56.5 pts. for the manufacturing and the services sectors) turned out to be significantly higher than projections. However, the indicators for the US were definitely lower than expected, whereas still solid. The manufacturing PMI stood at 53.4 pts. and the services PMI amounted to 52.9 pts.. On the other hand, the dynamic of the durable goods orders did not fail. It stood at 1.7% m/m vs 1.5% expected.

The Polish stock market indices ended the last week in negative territory as well. During the whole week, the WIG20 fell by 2.7%, the mWIG40 went down by 2% and the sWIG80 declined by 0.1%. This time the Polish economic calendar was not rich. Investors learnt the unemployment rate for February. The result of 8.5% confirmed a solid condition of the labor market. There was also a publication of the minutes from the last meeting of the MPC. The document confirmed the attitude of the council – the policy of the interest rates stabilization will be continuing until the end of 2017. Nevertheless, some investors still believe that the MPC will raise the interest rates in the current year. Investors also learnt many financial statements of companies listed on the WSE, for instance, the financial performance of Uniwheels, Forte and GTC was very good.

This week, investors will learn a lot of macroeconomic data from the US and the Euroland. The American GDP growth rate will be in the spotlight. Moreover, in the upcoming days Theresa May will send an official letter informing about leaving the UE by the Great Britain. The earnings season of companies listed on the WSE is still going on. This week, financial statements will be published, among others, by Wielton, CD Projekt, ENEA, Energa and Bogdanka.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week, the blue – chip index decreased significantly. As a result, there was a price gap on the graph and the WIG20 ended the week at 2,234 pts.. The market broke a line of a upward trend, but then it was trying to return. The test did not bring a desired effect. Furthermore, the last candle was doji – the market uncertainty appeared. After all, the declines were accompanied by the lower volume of trade. So far, the correction has taken the form of a consolidation. A potential breakthrough of the support level at 2,200 pts. should be considered as a strong sell signal.

Graph 2: Ursus daily. Source: Stooq

The most outstanding company in the past week was Ursus. During the last five trading days, its share price took off by 33.2%. The stock price has been moving in an upward trend since June 2016. However, last week’s news on a new significant agreement was a very strong incentive for the share price of the farm machinery manufacturer. Nonetheless, the psychological level of PLN 4 turned out to be too solid barrier. In the upcoming days the market may test the support level at PLN 3.5. After such dynamic increases, a continuation of the correction cannot be ruled out, whereas with a keeping the potential for further growths in a broader perspective.

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

This material is intended to be for informational purposes only and does not constitute any investment, legal or tax advice or any other type of advice nor constitute an offer according to the Civil Code or a public offer within the meaning of the Act on Public Offering. MM Prime TFI SA has done due diligence to ensure that the information contained in this presentation is accurate and based on reliable sources. MM Prime TFI SA is not responsible for the accuracy and completeness of the information, nor for any damage that may arise from the use of it. Nothing in this document should be construed as an investment advice. The use of this material as the basis or evidence to make an investment decision takes place at the sole risk of the person who takes such a decision. This material is available free of charge.