Summary

Despite the facts that the American stock exchanges were closed on Thursday (Thanksgiving Day) and they were open shorter on Friday (Black Friday), their major indices ended last week in the green color – the DJI and the NASDAQ rose by 1.5% and the S&P500 increased by 1.4%. What is more, all of them reached their historical peaks. In Europe, the market sentiment was rather bullish as well. During the whole week, French CAC40 went up by 1%, German DAX soared by 0.3%, whereas British FTSE250 fell by 0.3%. Investors focused on the latest macroeconomic data readings, especially from the US. The dynamic of the durable goods orders stood at 4.8% m/m vs 1.5% expected. The manufacturing PMI amounted to 53.9 pts. vs 53.4 pts. projected. In contrast, the services PMI stood at 54.7 pts. – the result was lower by 0.1 percentage point than market consensus. Investors also learnt the minutes from the last meeting of the FOMC. It confirmed that the council intended to raise the interest rates. The market was almost certain that the decision will be made on December (the probability of the hawkish decision estimated by the FedWatch Tool stood at 95%). These expectations were reflected in the foreign exchange market which remained pro - dollar.

Last week was very successful for investors at Ksiazeca. Despite the fact that the latest readings from the Polish economy turned out to be disappointing, major stock indices ended last week in positive territory. During the whole week, the WIG20 grew by 4.1%, the mWIG40 rose by 4% and the sWIG80 went up by 0.8%. The dynamic of the manufacturing production stood at -1.3% y/y vs 0.8% projected. Moreover, the retail sales growth rate amounted to 3.7% y/y vs 4% expected. Nevertheless, the release of the unemployment rate did not fail – it stood at 8.2%. Investors learnt the minutes from the last meeting of the MPC as well. According to the projections, inflation will grow slowly, whereas its dynamic will not be significant enough to tighten the monetary policy. It is also worth paying attention to the speech of Minister of Development. He announced that most of OFE’s funds would be transferred to the third pillar of the pension system – it was good news for the market, because it meant that the important capital will not drain away from the market.

The highlight of the week will be the publication of the American payrolls. In addition, it is worth paying attention to the revision of the GDP growth for the third quarter of 2016 in the US and Poland. There will also be final readings of the PMIs and the release of the unemployment rate for the Eurozone. The manufacturing PMI will be published in Poland as well. Furthermore, S&P will present a review of the Polish credit rating on Friday.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

Last week the index of the largest Polish companies increased significantly. Thus, it ended Friday’s trading session at 1,796 pts.. The dominance of bulls was very evident, whereas the resistance level at 1,800 pts. once again turned out to be too solid for the market. It should be noted that growths were accompanied by the increased volume of trade. On the one hand, another test of the barrier at 1,800 pts. can be expected. A breakthrough will be a signal for further growths towards the next resistance level at 1,870 pts.. On the other hand, recent increases could have been the next wave under a consolidation (the sideways trend has already last for half a year). In this instance, it means that a dominance of bears can be expected in the following days.

Graph 2:CD Projekt daily. Source: Stooq.

This time CD Projekt deserved the company of the week name. During the past five trading sessions its share price went up by 22.5%. Dynamic growths caused that the period of consolidation, with a very narrow range around the psychological level of PLN 40, was ended. Last week there was a publication of a recommendation to buy with a target price of PLN 61. It was an incentive for growths of CD Projekt’s share price. However, the RSI oscillator indicated overbought, so further increases will probably be preceded by a correction. The next support level stands at PLN 45.

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

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