Summary

There were not many investors who complained about the lack of emotions in the first week of December. American and European financial markets were looking forward to the public appearances of Fed’s and ECB’s presidents. As a result, the beginning of the week was quite smooth. On Wednesday, the fed chairmen Janet Yellen, who was discussing the Beige Book, confirmed an increase of interest rates on December. In the wake of that, the US markets started to decline. To add insult to injury, Mario Draghi, the president of ECB, in line with the consensus cut the deposit rate and extended QE on Thursday. However, contrary to the investors’ expectations, the scale of QE was not increased. Therefore, global stock exchanges went down rapidly. Very good data on labor market from the USA leaded Wall Street to the recovery on Friday. As a result, the S&P500 grow by 0.1%, the NASDAQ and the DJI took off by 0.3% last week. Unfortunately, European financial markets were not able to recover. The CAC40 decreased by 4.4%, the DAX depreciated by 4.8%. Only British FTSE250 rose by 0.6%.

It was another week in which the polish stock exchange deteriorated. The WIG20 broke the next psychological level of 1,900 points without any problems. Furthermore, indices of small and medium sized companies decided not to stand out from the domestic market and they liked the red color. Certainly, the decreases were caused by decisions of the most important central banks. Nevertheless, the polish market dealt with political instability in the country. Surprisingly, the President gave an formal speech to stabilize the situation. It seemed that politicians were not aware how their decisions and quarrels destabilize polish stock market. The tense situation could be noticed also on the boards of companies. There were some rumors about resignations on their management boards. Even the GDP growth that was better than expected (3.5% YoY versus 3.4% exp.) did not break a downward trend. In the background, the MPC did not change interest rates. At the end of the week the WIG20 decreased by 3.5%, the mWIG40 went down by 2.3% and the sWIG80 fell by 2.6%.

The new week should be much calmer and there will not be a lot of economic data. Nevertheless, investors will pay attention to the industrial production reading in Germany and the revision of euro zone’s GDP growth. In addition, the US Census Bureau will publish data on retail sales. In Poland investors will follow the political stage which is extremely dynamic and affects Polish financial market, especially the index of the biggest companies. Therefore, any positive message that relates to the stabilization of the political risk, will help the Stock Exchange in Warsaw.

Technical Analysis

Graph 1. WIG20 daily. Source: Stooq

Lately, it was hard to believe that the WIG20 would break the psychological limit of 2,000 points. What is more, the index continued a downward trend and fell below 1,900 pts. last week. However, we can find some positive signals too. Firstly, lately there were high volumes. Secondly, the session ended with an umbrella candle on Friday (white candle with a long lower shadow) which meant a reversal of the trend. Furthermore, the RSI oscillator was definitely below the thirty-point mark and it probably will show a buy signal.

Graph 2. AmRest daily. Source: Stooq

In the background of red Polish stock exchange AmRest is another green pearl. Good financial results caused that its share price reach a peak. The company is in a long-term upward trend. There was an attempt to break through the level of PLN 200. However, the RSI oscillator pointed out a sell signal. It is worth noting that volumes diminished. This probably means that encouraging development prospects for the company are discounted in the prices and the share price is going to go down slightly.

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

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