Summary

The beginning of a new year has been very successful for the investors. There was another week of stock market indices growths. During the whole week, the DJI and the NASDAQ increased by 1%, while the S&P500 grew by 0.9%. In Europe, the German DAX rose by 1.4% and the French CAC40 soared by 0.2%. The bull market has been going on, as well as a recovery of the global economy which is systematically confirmed by the macroeconomic data readings. Last week, the commentaries of the representatives of the ECB and the Fed were in the spotlight. The people from the European bank expressed their concern about the last movements of the EUR/USD. This led to the speculations regarding the interpretation correctness of the last minutes from the ECB Governing Council meeting. In the US, it was confirmed there would be three interest rates raises in 2018. In the context of these circumstances, the upcoming meetings of the ECB Governing Council and the FOMC seem to be extremely important.

In Poland, there was also the bullish sentiment. During the whole past week, the WIG20 grew by 2.5%, the mWIG40 increased by 2.4%, whereas the sWIG80 fell by a symbolic 0.02%. As a result, the index of the whole market went up by 2.2% and approached the historical peak (67 772 pts.). This time special attention should be paid to the latest macroeconomic data from Poland. The dynamics of wage (7.3% y/y) and employment (4.6% y/y) did not fail once again. On the other hand, the releases of the manufacturing production and the retail sales turned out to be quite disappointing. The results at 2.7% y/y and 6% y/y were lower than projections noticeable (2.9% y/y and 8.7% y/y). After all, the market’s reaction was rather neutral. The discrepancies were probably caused by the differences in number of working days in 2017 and 2016. The condition of the polish economy remains solid. Moreover, there are plenty of indications this situation will not change in the current year.

This week, an economic calendar seems to be very interesting. Firstly, attention should be paid to the latest macroeconomic data: the preliminary readings of the PMIs for the Euroland and the US, the German Ifo index, or the dynamic of the American GDP for the fourth quarter of 2017. In addition, there will be the World Economic Forum in Davos, during which the most important global politicians will be speaking. However, the ECB Governing Council meeting deserves the event of the week name. The market does not expect any changes in the monetary policy, whereas it will focus on the bank’s message and the conference with Mario Draghi. It should be also noted that the earnings season of companies listed on the WSE will be started. This week the financial statements for the fourth quarter of 2017 will be published by PKN Orlen.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week brought a significant change in the index of the largest Polish companies. The market was dominated by bulls, so the WIG20 ended the Friday’s quotations at 2,601 pts. and it broke the upper limitation of a consolidation at 2,560 pts. The breakthrough should be considered as an initial buy signal. Now, a correction should be expected. This has been signaled by the technical oscillators. A defense of a support level at 2,560 pts. will probably confirm the initial signal. This will be an incentive to continue a long-term upward trend as well.

Graph 2: Alior Bank daily. Source: Stooq

This time it is worth paying special attention to Alior Bank. During the last five trading days, the share price of the company rose by 9.2%. Dynamic increases led to the breakthrough of the resistance level around PLN 80. Moreover, the stock price reached a new historical peak at PLN 88.5. An increased volume of trade confirmed the strength of bulls. A technical situation has been bullish, so the continuation of an upward trend cannot be ruled out. Nevertheless, a correction should be expected in the near future. The technical oscillators have been overbought significantly. The closest support level stands at PLN 85.

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

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