Summary

Due to the last week’s holiday of Kubram Bayram, the tension around the situation in Turkey and emerging markets weakened noticeable. However, it did not mean that the politic and economic problems of Ankara lost their importance. Last week, the minutes from the last meetings of the FOMC and the ECB Governing Council were in the spotlight. The documents did not bring anything new, whereas they confirmed previous plans and announcements of the banks. It is worth mentioning the Jackson Hole Symposium as well, especially the speech of Jerome Powell. The Fed chief confirmed the bank’s readiness to continue gradual interest rates raises, however, he also added these would depend on the macroeconomic situation. The market interpreted these words as dovish ones and even as a nod to the White House. Earlier, Donald Trump had criticized the Fed’s monetary policy publicly. As a result, it is not surprising the American currency was under the pressure last week. Meanwhile, the stock market sentiment was quite bullish. During the whole past week, the NASDAQ increased by 1.66%, the S&P500 rose by 0.86% and the DJI soared by 0.47%. It is worth noting that the S&P500 and the NASDAQ reached their new historical peaks, which was undoubtedly the aftermath of a very successful earnings season on Wall Street. The European stock market indices ended the past week in positive territory as well. During the last five trading sessions, the French CAC40 rose by 1.64% and the German DAX went up by 1.51%.

In Poland, this was very fulfilling week for the shareholders of the largest companies – during the whole past week, the WIG20 increased by 4.28%. It is possible the foreign capital was slowly returning on the WSE due to the reallocation of funds from the classification of Poland into the developed markets by FTSE Russel and Stoxx 600. The performance of small and medium companies’ indices was much worse. Last week, the mWIG40 rose by 0.53%, while the sWIG80 decreased by 0.89%. Attention should be also paid to the July’s macroeconomic data from Poland. The dynamics of the manufacturing production (+10.3% y/y) and the retail sales (+9.3% y/y) exceeded projections significantly. Investors also learnt the minutes from the last meeting of the MPC. The document confirmed the dovish attitude of the council and it again was not a support for the Polish currency.

Today, investors will learn the German Ifo index. In the following days, it is worth paying attention to the releases of the confidence indices from the Euroland, or the revision of the annualized GDP growth rate for the second quarter from the US. In Poland, the earnings season of the companies listed on the WSE is gaining a momentum, so many entities will publish their financial statements for the first half of the year.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The dynamic growth of the WIG20 caused it again approached resistance level at 2,330 pts. The volume of trade remained stable, while the neutral value of the RSI oscillator create further room to continue the upward wave of the blue-chip index. In the coming days, another attempt to break this twice tested resistance cannot be ruled out. It is worth remembering that in case of the success another barrier stands at 2,400 pts. The breakthrough of this level will probably be a clear signal for bulls.

Graph 2: Lotos daily. Source: Stooq

This time, we chose Lotos as a company of the week. During the whole past week, the valuation of the concern from Gdansk went up by 6.24%. The moving averages (15-day and 50-day) formed a golden cross pattern – a strong buy signal. Since then, the share price was moving towards north. The market ended the period of consolidation and reached a new historical peak at PLN 71.50. Attention should be also paid to the increased volume of trade which confirmed the strength of bulls. On the other hand, the overbought technical oscillators signaled a potential correction. The closest support levels stand at PLN 70 and PLN 61. However technically, the continuation of rally towards north seems to be possible in the wider horizon, especially if the foreign capital returns on the WSE.

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

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