Summary

The first week of August did not bring significant changes in the major global stock indices. In Europe, British FTSE250 rose by 1.1%, German DAX increased by 0.3%, while French CAC40 declined by 0.7%. In the US, the NASDAQ went up by 1.1%, the DJI took off by 0.6% and the S&P500 soared by 0.4%. Investors focused on the readings of the PMI indices for the Eurozone which turned out to exceed the market expectations. The manufacturing PMI stood at 52 pts. and the services PMI amounted to 52.9 pts.. Meanwhile, the readings of the American ISM indices and the dynamic of the factory goods orders disappointed investors. However, data from the US labor market did not fail once again. The unemployment rate stood at 4.9% vs 4.8% expected, whereas the nonfarm payrolls amounted to 255.00K vs 182.00K expected. It caused that the probability of the interest rates raise by Fed in the near future increased slightly. Nonetheless, the Bank of England was in the spotlight. The MPC decided to cut the interest rates the first time in seven years. Moreover, the BoE decided to extend the scope of quantitative easing.

Last week polish stock market was dominated by the green color. The WIG20 rose by 3.7%, the mWIG40 went up by 2.9% and the sWIG80 increased by 1.4%. The publication of the presidential project concerning conversion of Swiss franc loans improved market sentiment significantly. The new law turned out to be more favorable for banks than the original proposal. It was very good information for the banking sector, the Polish economy and Polish zloty. Investors learnt the manufacturing PMI as well. It stood at 50.3 pts. in July vs 51.8 pts. in June. Meanwhile, the situation of the Polish labor market improved once again. The unemployment rate at the end of July amounted to 8.6%. It was the lowest level since 1991. Moreover, the earnings season last on the WSE. Financial results of Grupa Kety, ING and Stalprodukt did not disappoint investors. On the other hand, the financial performance of Alma was very poor. Nonetheless, it should be noted that the company was suffering from financial problems for a long time.

Certainly, the highlight of the current week will be Olympic Games in Rio. Although, it is worth paying attention to the latest data from the Eurozone: the Sentix index, the dynamic of the industrial production and the GDP growth for the second quarter of 2016. There will be the publication of data on the retail sales in the US as well. In Poland, investors will learn the CPI. In addition, special attention should be paid to presentations of the companies’ financial statements for the second quarter of 2016.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

Last week was very successful for the index of the largest companies. As a result, the WIG20 managed to break the psychological level of 1,800 pts.. It ended the first week of August at 1,825 pts.. Lately, the blue – chip index was in the short – term upward trend. Thus, the course overcame the line of the long – term downward trend. Furthermore, at the end of July moving averages formed a golden cross pattern. The RSI oscillator remained neutral. There were plenty of indications that the WIG20 would continue to move towards north. The nearest resistance level stands at 1,900 pts.

Graph 2: Braster daily. Source: Stooq.

Despite significant increases of the banks’ share prices, we chose Braster as a company of the week. During the whole week, its share price grew by 30%. The course was in the sideways trend. In May, there was a failed attempt to start the upward trend. Nevertheless, the last dynamic growths ended a period of the consolidation. It is worth noting that the RSI oscillator increased dynamically and indicated an overbought. Therefore, a correction can be expected. The nearest support level stands at the psychological barrier of PLN 20.

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

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