Summary

Undoubtedly, the FOMC meeting was the most important point in the last week’s economic calendar. In line with the market consensus, the council did not make any changes in the monetary policy. The bank’s statement was much more important issue for investors. According to the document, the reduction of the Fed’s balance would soon start, however, the FOMC paid special attention to the lowering inflation during the last meeting as well. The Federal Reserve is the only hawkish central bank among those the major ones, whereas this aspect has seemed to be discounted, so the market has focused on less dovish rumors from the ECB. After all, it seems that the announcement of the ECB Governing Council to consider the future of QE is revalued by the market. It creates space for disappointment and increased volatility, especially in the foreign exchange market. Nevertheless, the central bankers will go on vacation. Next meetings of the FOMC and the ECB Governing Council will take place in September. It is also worth paying attention to the latest macroeconomic data. The initial readings of the PMIs for the Euroland were lower than expected, albeit still solid. However, there are more and more robust signals from the US economy. The annualized GDP growth rate for the second quarter of 2017 stood at 2.6% - the result was in line with projections. Nonetheless, the last week did not bring any significant movements of the stock market indices – the DJI rose by 1.2%, the NASDAQ declined by 0.2% and the S&P500 went down by a symbolic 0.02%. In Europe, French CAC40 soared by 0.3%, German DAX fell by 0.6% and British FTSE250 deteriorated by 0.1%.

This time the Polish economic calendar was not rich. Investors learnt the unemployment rate. The result of 7.1% was another confirmation of the Polish labor market strength. The IPO of Play was the most important event of the past week. After all, the debut was quite unsuccessful. The first session brought a decline in the share price of 1.39%, however, the volume of trade was really high. In addition, the earnings season for the second quarter of 2017 of companies listed on the WSE was started last week. The WSE published the highest profit in its history. Orange released very good financial results as well, but these were an effect of one-offs. During the whole week, the WIG20 and the mWIG40 rose by 0.7%, while the sWIG80 fell by 0.5%.

This week, investors will focus on the latest macroeconomic data from the Euroland – investors will learn the PMIs, the unemployment rate and the dynamic of the GDP. Moreover, it is worth paying attention to the American payrolls. In Poland, there will be releases of the CPI and the manufacturing PMI. Attention should be also paid to the subsequent publications of the financial statements of companies listed on the WSE as well.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

The last week brought another attempt to break the upper limit of consolidation at 2,360 pts.. The domination of bulls was noticeable, but the test of this barrier once again ended in failure. However, the WIG20 ended Friday’s trading session exactly at 2,360 pts.. The market seems to be getting closer to end of the horizontal trend. After all, the breakthrough of the resistance level at 2,420 pts. is the most important goal for the bulls. This will probably open a way to start a new upward wave.

Graph 2:Torpol daily. Source: Stooq

This time we would like to distinguish share price of Torpol which grew by 9% last week. The stock price rebounded from the local hole and it was moving towards a resistance level at PLN 13.7. The breakthrough of this barrier will end a correction and open the way to the reaching a new historical peak. It is worth noting that the MACD oscillator indicated a buy signal, while the RSI oscillator was in the overbought area. It is possible that that market will soon realize its profits, albeit in a broader prospective the potential for further increases of Torpol’s share price seems to be significant, especially since the company systematically increases its portfolio of orders – it has a positive impact on the market expectations concerning future financial results of the company.

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

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