Summary

In the last week of March there was a bearish market sentiment in Europe. French CAC40 fell by 1% and German DAX went down by 0.9%. Unlike to them, British FTSE250 rose by 0.5%. Investors learnt the confidence indices for the Eurozone. However, their values were lower than the market’s expectations. In addition, there were publications of the industrial PMI’s in the UE countries. The value of the index for the Eurozone stood at 51.6 pts. vs 51.4 pts. expected. In the US, the stock markets moved towards north – the NASDAQ took off by 3.1%, the S&P5600 increased by 1.8% and the DJI grew by 1.5%. Certainly, Janet Yellen helped American stock markets to grow. The Fed’s Chairwomen damped investors’ expectations for interest rates increases. There were also plenty of data readings on American labor market. These turned out to be relatively good. On the one hand, economy activity of Americans increased, whereas on the other the unemployment rate grew to 5% in March from 4.9% in February. Nevertheless, the releases of the Conference Board index, the Chicago PMI and the ISM manufacturing index did not fail. It is worth paying attention to the price of crude oil. During the whole week, it decreased by 3.8%. Nonetheless, the decline did not deteriorate the market tone in the US. Moreover, China published the industrial PMI which stood at 49.7 pts. vs 48.75 pts. expected. In Japan, there were many economic data releases. Nevertheless, the figures were quite poor. As a result, the NIKKEI225 dropped by 3.6% on Friday. During the whole week, the index fell by 4.9%.

Polish stock indices ended last week in the green – the WIG20 increased by 1%, the mWIG40 went up by 0.1% and the sWIG80 soared by 0.6%. The CSO published the dynamic of the price growth. It amounted to -0.9% in March vs -0.8% in the previous month. Furthermore, investors learnt the industrial PMI which stood at 53.8 pts. in March vs 52.8 pts. in February. The season of the companies’ financial results was completed. Nevertheless, investors’ attention was paid to the proposals on the dividends. The highest dividend yields were proposed by Wadex, FAM and Skarbiec, although some companies did not want to share their profits with the investors e.g. Synthos, Alior and Ciech.

In the current week it is worth paying attention to the data from the Eurozone – the unemployment rate, the Sentix index, the services PMI and the dynamic of retail sales. Investors will also learn the Chinese balance of payments and the services PMI. It should be reiterated that the publications of the ECB’s and the Fed’s minutes from the last meetings of their boards will be in the spotlight. In Poland, there will be the MPC meeting. The interest rates may remain unchanged, whereas it will worth focusing on the council’s commentaries concerning deflation in Poland.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The WIG20 ended the last week of the March at 1,973 pts.. The index tried to break the psychological level of 2,000 pts.. However, the RSI oscillator showed a class C bearish divergence. As a result, the last day of the week was dominated by bears. The signal indicated by the divergence was weak. In addition, lower volumes accompanied Friday’s declines. In the current week, the WIG20 may try to break the level of 2000 pts. again. The market tone seems to be quite good. A breakthrough will be a signal for further movements towards the next resistance which stands at 2,035 pts.

Graph 2: Wadex daily. Source: Stooq.

We chose Wadex as a company of the week. During the whole week, its share price increased by 22%. The company offered the highest dividend yield on the WSE. It is worth noting that upcoming sessions may bring a correction. The RSI oscillator showed a bearish divergence. What is more, a three gaps pattern appeared in the price chart. The last day of the week brought a test of the support at PLN 7.46. Friday’s black candle may be a signal of the further declines. The nearest supports stand at PLN 6.88 and PLN 6.

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

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