In a bull market, every reason is good for growth. On Monday, it was a weekend breakthrough in the shutdown of the US federal government that has been ongoing since October 1. There is a chance that it will come to an end soon, which has caused a wave of optimism in global stock markets. The main indexes on the Warsaw Stock Exchange, after strong increases, were close to historical records.
A wave of market optimism swelled with the news that there is a chance that the US will reach an agreement on ending the longest government shutdown in the history of the country. A group of senators from the Democratic Party broke with their party's line and agreed to a compromise on financing the government until January, which allowed the deadlock to be broken and a procedural vote to be held in the Senate on Sunday, enabling further work on the financing project.
These reports sparked demand for risky assets, and the positive sentiment spread across the markets, pushing up the prices of oil, metals, Bitcoin and stock indices. As you can see, during a boom, any reason is good to justify increases, but what is worse is that with the possible return of the government to work, overdue and current data from the economy will probably be released (e.g. inflation, unemployment rate, etc.), which may turn out to be not so good for the markets.
Additionally, the White House announced on Sunday that China has decided to lift export controls on rare earth elements. Another signal of relaxation in China-US relations after the October meeting between Presidents Xi and Trump was Monday's announcement that the Chinese Ministry of Commerce was suspending sanctions against five American shipbuilding companies for a year. Let's also not forget that the market is still pricing in a greater chance of another Fed rate cut in December, although the scale of belief in this has weakened somewhat in recent days (via FedWatch).
Broad market optimism supported stock markets, with DAX gaining approximately 1.8%. The S&P500 was up 1% and the Nasdaq was up 2%. The WSE followed the core markets in solidarity, showing strong increases in the main indices from the morning, which during the day were close to bull market records (WIG20) and historical records (WIG, mWIG40 and sWIG80). This was supported by the weakening of the dollar and the better condition of the zloty, supported by the lack of change in the rating outlook by S&P.
At the end of the day, WIG20 gained 1.64%. WIG was higher by 1.52 percent. In turn, mWIG40 added 1.4%, and sWIG80 gained 0.65%. For a session in the middle of a long weekend in Poland, the turnover can be called decent, especially compared to several sessions last week. In the broad WIG exchange rate, the exchange value was over PLN 1.43 billion, of which PLN 1.24 billion concerned WIG20 companies.
All companies listed in WIG20 increased since the morning, but at the end of the session several stocks turned red and lasted until the end of trading. The share prices of Santnder (-1.82%), Alior (-0.48%), LPP (-0.17%), and CCC (-0.11%) were below the line.
On the other side of the WIG20 results table, there were strong shares of Budimex (5.04%), which can be considered a rebound after four days of continuous declines, during which the company lost a total of over 4%.
PGE's share price turned out to be the strongest (4.53%), which correlated with good sentiment towards most energy companies. Enea's shares listed in mWIG40 gained 3.45 percent, Tauron's increased by 1.94 percent, and Polenergia's increased by 3.23 percent.
However, among the energy stocks, the most outstanding was the price of Energa, which started to gain significantly on the stock exchange around 11 a.m., and after a dozen or so minutes the scale of increases exceeded 21%. There was speculation on the market about the reason for the sudden increase, more about this in the article “Energy is the star of the weekend session on the WSE. A game for results or a strategic decision?” At the end of the day, the Energy price gained 15.37%.
Let us recall that energy companies lost heavily on Friday's session (PGE's stock lost over 6%). A day earlier, on Thursday, the WIG Energia index reached a historic peak of 4,945.94 points.
Returning to WIG20, over 3 percent. Dino (3.57%) and KGHM (3.16%) shares gained even more. Up to PLN 101.80, i.e. by 2.9%. Orlen's share price gained. Over 2 percent from WIG they still had mBank, Orange and PKO rates on the counter.
Michal Kubicki
