Summary

In the first week of May major global stock market indices were dominated by the green color. During the whole past week, French CAC40 rose by 3.1%, German DAX increased by 2.2% and British FTSE250 went up by 0.4%. In the US, the NASDAQ took off by 0.9%, the S&P500 soared by 0.6% and DJI grew by 0.3%. The market focused on the FOMC meeting last week. In line with expectations, the interest rates remained unchanged. Nonetheless, neither the Fed statement nor the public commentaries of the bank representatives were too much interesting. What is more, these did not concern the shape of the future monetary policy. However, after slightly weaker macroeconomic readings from the US, investors saw some better data. Undoubtedly, the releases of the services PMI and ISM indices exceeded market expectations. In addition, the unemployment rate dropped to 4.4% and the non – farm payrolls stood at 211K vs 185K projected. Moreover, the macroeconomic data from Europe did not fail as well. As a result, it was not surprising that the market sentiment was bullish, especially since Emmanuel Macron won the race for the French presidential chair. The market favorite beat Marine Le Pen with 66% of the vote. Attention should be also paid to the price of crude oil which shrank below the psychological level of 50 dollars per barrel. This was a result of the growing crude oil output in the US which was at its highest level since August 2015.

In Poland, the long May weekend brought a decrease in activity of investors. After all, it was another successful week for the Polish stock market – the WIG20 increased by 0.2%, the mWIG40 rose by 0.7%, while the sWIG80 went down by a symbolic 0.04%. It is worth paying attention to the publication of the manufacturing PMI. The index stood at 54.1 pts. vs 53,9 pts. expected. This was another confirmation of the solid condition of the Polish economy which has been on the path of recovery. Investors learnt some important financial statements of companies listed on the WSE as well. The financial performance of LPP in the first quarter of 2017 was worse than the market consensus. On the other hand, KGHM managed to improve its financial results in the first quarter of 2017 against those in the corresponding period of the previous year.

In the current week the publications of the macroeconomic data from the Great Britain, Germany, France and the US will be in the spotlight. In addition, investors will learn some data on the Polish inflation. There will be a speech of Mario Draghi in the Dutch parliament on Wednesday as well. What is more, this week, the European Economic Congress will take place in Katowice. On Friday, Moody’s will present a review of the Polish credit rating.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq

After breaking through of a consolidation, the index of the largest Polish companies started a new upward wave. Nevertheless, the psychological resistance level at 2,400 pts. proved to be too solid barrier for the market, so the WIG20 ended the last week at 2,382 pts.. The correction was signaled by the overbought RSI oscillator. Furthermore, the volume of trade was again high. So far, the domination of bulls has not been in jeopardy, so in the near future another test of the resistance level at 2,400 pts. cannot be ruled out. On the other hand, a breakthrough of the support level at 2,300 pts. should be considered as a sell signal.

Graph 2: Groclin daily. Source: Stooq

This time Groclin deserved the company of the week name. During the whole week, its share price grew by 20.2%. After dynamic declines, there were equally strong growths of the stock price, which were accompanied by the increased volume of trade. As a result, a price gap appeared and a V bottom has been probably forming. However, it should be noticed that the market sentiment about Groclin was bearish for a long time, so the stock price has remained in a long – term downward trend. This has been a reflection of weak company’s fundaments. Thus, it is worth waiting for a confirmation of a V bottom.

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

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