Summary

European and American stock markets ended the last week of February in the green. However, its first part was dominated by bears. The market sentiment deteriorated after some releases of the economic data from the Eurozone. Plenty of them were disappointing. The services PMI stood at 53.0 pts. in February vs 53.6 pts. in January. What is more, the industrial PMI decreased from 51.0 pts. to 53.3 pts.. It is worth reiterating that German Ifo index went down to 105.7 pts. in February from 107.3 pts. last month. It was the third decline in a row. Moreover, investors were worried about the Brexit. According to the latest survey, 38% of respondents wanted to leave the European Union, 37% wished to remain and 25% were undecided. To add insult to injury, American Conference Board index fell from 97.8 pts. in January to 92.2 pts. in February. Nevertheless, the market tone improved on Wednesday. Therefore, stock exchanges started to move towards north. The following days brought very good macroeconomic data from the US. Surprisingly, new orders for manufactured durable goods took off sharply. Furthermore, the annualized GDP growth for the fourth quarter of 2015 stood at 1.0% vs 0.5% expected. Finally, the main stock markets ended the week in positive territory. During the whole week the NASDAQ rose by 1.9%, the S&P500 increased by 1.6% and the DJI took off by 1.5%. In Europe, British FTSE250 went up by 2.5%, French CAC40 grew by 2.2% and German DAX rose by 1.3%.

The WSE ended the week in the green as well – the WIG20 increased by 0.2%, the mWIG40 took off by 1.9% and the sWIG80 rose by 1.2%. Previous week was not rich in macroeconomic data. Nonetheless, investors learnt the unemployment rate for January which stood at 10.3%. On the other hand, the companies started to publish their financial results. Kopex was in the spotlight. It released its quarterly statement which showed negative financial results. Thus, its share price went down by 26%. Unlike to Kopex, Kernel ended the fourth quarter of 2015 with a net profit which grew by 100% y/y. In addition, it passed 100 days since the Government has started its term. It is worth noting that during this time the WIG20 moved rapidly towards south and reached a 7 – year low point.

In the current week investors will learn many important data from the Eurozone – the unemployment rate and the dynamic of retail sales. There will also be a release of Chinese PMIs. The publication of data on American labor market (payrolls) will be the event of the week. In Poland, investors will learn the industrial PMI and the final GDP growth for the fourth quarter of 2015.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The index of the largest companies continued a short – term upward trend. At the end of the week it stood at 1,847 pts. The RSI oscillator was neutral and it did not indicate any signals. It is possible that the current week will bring further movements towards north. They may cause a breakthrough of the long – term downward trend. Perhaps, if the course breaks the resistance line, there will be a strong signal for further growths towards the psychological level of 1,900 pts.. Thus, forecasts for the WIG20 seems to be promising.

Graph 2: Kernel daily. Source: Stooq.

Kernel was last week’s stock of the week. A very good financial results helped its share price to grow (the increase of 8.3% during the whole week). After the definitive breakthrough of the upward trend’s line, the course was in a sideways trend and it tried to break a support line. Nevertheless, the latest increases caused a significant rebound. Recently, the share price tested the resistance of PLN 50. The RSI oscillator was above the 70 pts. mark and it may indicate a sell signal soon. The other technical indicators pointed out a buy signal. Therefore, the course may move towards the next resistance which stands at PLN 55.

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

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