Summary

The past week was extremely interesting and full of market emotions. Investors focused on the FOMC meeting. As expected, the interest rates remained unchanged. However, the market consensus assumed that the Fed would tighten the monetary policy during the last meeting of the year - it will take place on the 13th and 14th of December. Moreover, investors’ attention was paid to the terminative race for the White House. Successive scandals involving Hilary Clinton led to the increase in support for Donald Trump in the latest polls. This had an adversely impact on the global market sentiment. During the whole week, the NASDAQ fell by 2.8%, the S&P500 decreased by 1.9% and the DJI went down by 1.5%. In Europe, German DAX declined by 4.1%, French CAC40 dropped by 3.8% and British FTSE250 fell by 2.1%. Investors also learnt much macroeconomic data e.g. the American payrolls. The non – farm payrolls stood at 161K vs 175K expected. What is more, the September reading was revised – from 156K to 191K. The unemployment rate fell from 5% to 4.9%. Thus, this data should be regarded as a solid one – this was emphasized by some representatives of the FOMC as well. It is worth paying attention to the latest data from the Eurozone. The GDP growth for the third quarter of 2016 stood at 1.6% y/y and the unemployment rate amounted to 10% in September. Both values turned out to be in line with projections.

Last week was not successful for the investors at Ksiazeca. The global market sentiment adversely affected the Polish stock indices. During the whole week, the WIG20 declined by 3.3%, the mWIG40 went down by 2.9% and the sWIG80 decreased by 2.1%. In addition, the reading of the manufacturing PMI was disappointing. The index stood at 50.2 pts. vs 52.9 pts. projected. It was the lowest result since September 2014. Investors also learnt plenty of quarterly financial statements of companies listed on the WSE. ING Bank Slaski should be distinguished, because its net profit significantly exceeded market expectations. In contrast, the financial results of Alumetal were in line with projections. Nevertheless, EBIT was appreciably lower than a year ago, so after the report’s publication the share price went down rapidly.

The highlight of the current week will be the presidential elections in the US. The results will probably be a key factor for the market sentiment. Furthermore, it is worth paying attention to the latest economic data from the Euroland and China. In Poland, there will be a meeting of the MPC. The market consensus assumes that the interest rates will remain unchanged. Investors will learn a lot of quarterly financial statements of companies listed on the WSE as well.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

In the first week of November the blue – chip index was dominated by bears. As a result, the WIG20 ended last week at 1,758 pts., so in the proximity of a support level at 1,755 pts. (61.8% Fibonacci retracement). The RSI oscillator declined dynamically, whereas it remained neutral. There were plenty of indications that the market was in a correction phase. Perhaps, in the coming days there will be another attempt to break the psychological barrier of 1,800 pts.. Nonetheless, if the WIG20 chooses the opposite direction, the market will probably return to a sideways trend.

Graph 2: Briju daily. Source: Stooq.

This time it is worth paying attention to Briju. During the whole week, its share price increased by 13.2%. This year has been very successful for the manufacturer of jewelry – its course has been in an upward trend. After all, the resistance level of PLN 20 prevented further growths for the long time. After the MACD oscillator had indicated a buy signal, the market sentiment improved and the share price managed to break the barrier. The nearest resistance level stands at PLN 25. However, the RSI oscillator indicated overbought, so in the near future a correction can be expected.

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

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