Summary

The last week of November brought the increases in American and European Stock Exchanges which were carrying on the boom. However, Warsaw Stock Exchange did not take a leaf from the foreign markets and it declined again. The weakest part of polish stock was definitely the WIG20. It did not matter, if the largest companies presented quite good financial results or not. Their index, which primarily is consisted of companies from banking, energy and raw materials sectors, was still abreacting the political uncertainty connected with plans and actions of a new government. Indices of medium- sized companies ended the week slightly better, but still they liked the red color. The mWIG40 fell by 0.5% and the sWIG80 depreciated by 0.3%. Even quite good data on unemployment, that decreased to 9.6% mark in October, and a high level of prosperity leading indicator did not stop the downward trend in the polish capital market.

A lot of pieces of data from the USA were published last week. Certainly, investors were glad, that the revision of the American GDP pointed out an increase of 2.1% annualized to the previous growth of 2.0%. There was also a higher rise of a preliminary PMI for services (56.5pts. vs 55 pts.). Moreover, a pieces of information on unemployment benefits and American spending indicated that the economy has been better. Unfortunately, the preliminary PMI for industry failed. It stood at 52.6 pts. to the expected 53.9 pts.. There was also a sharp drop in the consumer confidence index in November from 97.6 points to 90.4 points. This ambiguous data caused some uncertainty and a weekly consolidation. Therefore, the NASDAQ grow by 0.4% and the S&P500 took off only by 0.05%. The DJIA declined slightly by 0.1%. Nevertheless, the preliminary PMI and the indices of confidence readings for the euro zone did not disappoint. Furthermore, the German GDP rose by expected 1.8% YoY, so the European exchanges liked the green color. The CAC40 and the FTSE250 took off by 0.4%, while the German DAX soared by 1.6%.

The first week of December will be full of important events and data readings. First of all, you should be focused on public appearances of Fed president Janet Yellen, who will review the Beige Book on Wednesday, and Thursday’s EBC decision on interest rates. We will learn also some data on industrials orders and the labor market in the USA. There will be also a release of final PMI indicators for the USA and the euro zone. In Poland, the CSO will publish the GDP growth, the CPI and the PMI indicators. To the public also will be given a communication after the MPC meeting on the level of interest rates.

Technical Analysis

Graph 1. WIG20 daily. Source: Stooq

It was another week in which the WIG20 decreased. The index of the largest companies seem to be settled below the 2,000 points mark for the longer period of time. The next support line seems to be at the level of 1,900 points. What is more, the WIG20 is in a downward channel and does not intend to leave its. The RSI oscillator figured out a bull divergence and the WIG20 reached the low of the trend channel. That gives a keystone to expect a short-term recovery to the previous support line surrounding the level of 2,000 points.

Graph 2. Ciech daily. Source: Stooq

The company, that was outstanding on a red background of Warsaw Stock Exchange was Ciech. The enterprise has been in a upward trend for a year and it does not seem to be afraid of a current market slump. Of course, Ciech is helped by some good quarterly financial results that were better that consensus. The share price stood at PLN 86.99 at the end of last week and it was a historic peak. However, you should pay attention to the RSI oscillator which indicates a sell signal. You can expect, that it will be only a slight drop, because the share price is far from the support line. Moreover, fundamental analysis of the company points out that it still has a high growth potential.

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

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