Summary
Last week did not bring a major settlement of the situation on the world indices. The direction was not clearly defined. In Europe, the changes were marginal - DAX gained a symbolic 0.02%, while the French CAC40 lost 0.19%. The correction is trying to exit the US stock exchange and last week may be counted among the successful. The DJIA gained 0.62%, the S&P500 went up 0.72%, and the tech companies showed the highest growth with NASDAQ ended up by 0.79%. The market was primarily expected to face the two most prominent US and eurozone monetary policyists at the Jackson Hole Symposium. While the reaction of the market was positive, it is certainly possible to feel inadequate. Both Mario Draghi and Janet Yellen avoided referring to monetary policy issues, and this was expected only by the head of the Fed. However, the market found that prudent statements testify to the lack of willingness to speed up rates increase in the US. The main reaction, however, was focused on the currency market, where the eurodolar strongly appreciated.
The WSE Warsaw Stock Exchange distinguished itself on the European background, although again the width of the growth gave much to wish. The mWIG40 index gained only 0.22%, it was better for sWIG80, gaining 1.34%. However, the stars were the largest companies grouped in the WIG20, which appreciated by 4.74%, thus surpassing the previous August's maxima. Such a pattern of growth suggested the involvement of foreign capital, which was also confirmed by the appreciation of the zloty. After very good results and accompanied by rising coking coal prices, JSW clearly gained by breaking the 100 zł barrier. The rise in copper prices fueled the appreciation of KGHM. The most bullish on Thursday's session were the fuel companies - Lotos and Orlen, gaining a good macroeconomic performance and further closing the VAT gap. From the wider market it is worth to increase the Benefit's shares in reaction to good results and positive developments on foreign markets. Eurocash disappointed by the results due to VAT problems. In the downfall was also LiveChat after publication of the report for the second quarter. However, the main disadvantage of the result was the USD / PLN exchange rate. The stronger zloty does not serve this company.
There will be plenty of macro publications this week, and the most important will be the Friday reading of employment change in the US non-agricultural and private sectors. In addition, PMI indices for the Chinese and European industry (including Poland) will be published on this day, and the ISM index for the US. Previously, it will not be boring - data will be released on the market, such as initial consumer inflation estimates in Germany, France, the euro area, Poland, and the Chicago PMI index from the US and revised GDP for Q2.
Technical analysis
Graph 1: WIG20 daily. Source: Bloomberg
It seems that the long, 4-month consolidation on the WIG20 graph ended successfully, breaking the resistance from below. The channel has a width of 150 points, so the upper limit is 2575. This zone is also a strong resistance holding the index in the range of 2013-2015, so its defeat will require exceptionally favorable circumstances. In the coming days, however, we can expect a return to 2400.
Graph 2: Eurocash daily. Source: Bloomberg
The Eurocash chart is at the final stage of the saucer formation. The slow reversal of the downward trend lasted for several months and resistance is currently underway around 35 PLN. The strength of the formation is reflected in its resilience to recent information on outstanding taxes and growing turnover. We expect longer stop around 40 zł. The extent of trend reversal formation gives hope for long-term growth, which is also in line with the recommendations of fundamental analysts.
Authors: MM Prime TFI S.A. Investment Management Team