Fourth consecutive session with a decline in WIG20

The WIG20 index, representing the largest blue-chip companies, has experienced its fourth consecutive session of decline, reaching a level of 2000 points. This decline is due to the negative market sentiment caused by the „hawkish” minutes released by the Federal Reserve. On Thursday, the WIG20 dropped by 1.13%, while the broader WIG index was down by 0.85%. However, the medium and small companies performed relatively better, with the mWIG40 and sWIG80 indices declining by 0.1% and 0.49%, respectively. The overall turnover on the market amounted to 854 million zł, with 657 million zł of that being attributed to the WIG20.

The discussion from the July meeting of the Federal Reserve has been received as hawkish, leading to declines in stock markets and an increase in the yield of 10-year U.S. Treasury bonds to levels not seen since October 2022. Speculation is growing that the central bank will extend its cycle of interest rate hikes, or at least maintain the current level for an extended period. According to the FedWatch Tool, the highest probability is for the rates to remain unchanged until the end of March. Just a week ago, the market was mostly pricing in rate cuts at that time. The possibility of a rate hike before the November meeting is currently estimated at around 41%, which is about 10% higher than a week ago.

Thursday also saw the release of unemployment claims data, which confirmed the strong job market and further supported the hawkish stance of the Federal Reserve. Risk aversion is causing capital to be withdrawn from emerging markets, and the strengthening of the dollar against the złoty is not supportive of the demand side. As a result, the WIG20, which is most sensitive to global sentiment, has declined by over 5.1% in the past four sessions.

The weakest sectors were the automotive industry (-4.62%), followed by banks (-1.63%), fuels (-1.56%), and mining (-1.33%). Only the construction sector saw a small increase of 0.48%. Among the WIG20 stocks, 18 experienced declines, with the banks suffering the most: Alior (-3.91%), mBank (-2.76%), and Santander (-2.13%). Despite the rebound in oil prices, the stock prices of Orlen (-1.66%) did not respond positively, and KGHM (-1.24%) and JSW (-1.42%) continue to approach their yearly lows. Digital Polsat (-1.95%) reported earnings below expectations, causing its stock price to reach 10-year lows. On the positive side, Allegro saw an increase of 0.53% in its stock price, while Dino’s stock price remained neutral.

Overall, the market focus has been on the companies that have released their earnings reports. One standout was Benefit, whose profits exceeded expectations, leading to an increase in its stock price by 11.18%. On the other hand, InteCars estimated its net profit in the second quarter to be significantly below expectations, resulting in a decline in its stock price by 6.84%. Similarly, MoBruk’s net profit in the second quarter was 8.9% lower than analysts’ expectations, causing its stock price to drop by 4.05%. Creepy Jar estimated its net profit in the first half of 2023 to be 12.8 million zł, compared to 18.6 million zł in the previous year, leading to a decline of 1.06% in its stock price. Lastly, the management of Grodno recommends allocating the net profit of approximately 20.1 million zł for the financial year ending on March 31, 2023, to the company’s reserve capital.

Sources:
– Bankier.pl