CCC, Orange and Orlen sank WIG20. “The candlestick pattern warns of an upcoming correction”
The Warsaw Stock Exchange ended Tuesday's session in a negative mood, and the WIG20 index fell by 1.08%. The decline in CCC caused by the publication of the Financial Times about business in Russia continues. The weakness of the energy sector, led by Orlen, and the uncertainty before the expiry of December contracts did not help either. These topics dominated trade with high turnover reaching PLN 2 billion. Despite the technical defense of the 3,067-point level, the candlestick system warns of an upcoming correction.
WIG20 fell by as much as 1.08%, reaching 3,103.28 points, with a turnover exceeding PLN 1.71 billion, and WIG returned by 0.97 percent with a turnover of PLN 2.03 billion. It was one of the weakest results in the region, which could have resulted from local factors such as concerns about the pace of economic growth and pressure on energy companies – the leading role in the supply camp was played by the heavy shares of Orlen, which responded with a decline of 3.08 percent to the strong depreciation of oil in the context of the chances of the return of Russian raw material to global markets – indicates Adam Stańczak, analyst at DM BOŚ.
WIG20 maintained the break above the resistance in the area of 3,067 points, where the upper limit of several weeks of consolidation was, but the candlestick system already warns against the possibility of correcting the last upward wave. Regardless, there is no decline in WIG20 below the recently broken resistance levels in the area of 3,067 points. demand will retain its technical advantage. When reading the WIG20 chart, however, it is worth remembering that on Friday the December series of WIG20 futures contracts will be settled, which should result in a dose of technical noise and make it more difficult to assess the systems on the index chart – says Stańczak.
The vast majority of companies listed in WIG20 fell on Tuesday. CCC shares were depreciated the most, by 8.09%. The company is burdened by Monday's news, when it was informed that its shareholders, Value Fundusz Inwestycyjny Zamkyjny and Ultro Investment, requested the convening of an EGM of the company, which would authorize the management board to purchase CCC's own shares and create reserve capital for purchase purposes. On that day, an article was also published in the Financial Times, which raises doubts about CCC's relations with entities that are formally unrelated, but personally and operationally close to the group.
“The key case concerns the sale of the Russian business in 2022 to a person from the family of the CCC CEO's partner and, despite +exit+, further distribution of CCC products,” Trigon analyst Grzegorz Kujawski wrote in a comment.
“Without referring to the issue of corporate governance, the article does not bring a new color to the perception of the Group's foundations, in particular the drivers of value creation. Business in Russia was not of a material nature for the CCC Group, but an asset of significant value. Before the sale, the business in Russia generated less than 2%. revenues“- he added.
On Tuesday, the second weakest company in WIG20 since the morning was Orange, whose shares were depreciated by 4.38%. The company's shares recorded one decline in the five previous sessions, in total during this time the company gained approximately 4.6%.
On Tuesday, Revolut announced the introduction of the Mobile Plans service in Poland. As part of full mobile service packages, the company offered, among others: unlimited voice calls and text messages in Poland and the EU, as well as other services, without the need to sign a long-term contract. Poland is the first market where Revolut makes the service available. Revolut is a global financial application used by over 65 million customers around the world, including over 5 million customers from Poland.
Orlen shares were depreciated by 3.05%. (up to PLN 91.90). The shares of the Płock giant reacted to the strong depreciation of oil in the context of the chances of the return of Russian raw material to world markets as a result of peace talks regarding Ukraine.
On the broad market, Nexity Global's shares were depreciated the most, by as much as 19.59%, the reasons for which can be seen in Monday's announcement about the termination of the investment agreement regarding the merger of Nexity Global with The Batteries.
However, to avoid being pessimistic, the shares of 107 companies increased in price on Tuesday's session. Looking at the broad market, the TOP5 included: Compremum, whose shares increased in price by 7.69%, reaching PLN 0.9800. Right behind it was Mennica with an increase of 7.16% (rate of PLN 47.9000), and the podium was closed by ZUE, which gained 6.76%, ending the day at PLN 11.0500, which was supported by information about the signing of a high contract. The leaders of the fastest growing entities were completed by construction and installation companies: Atrem, whose prices increased by 5.56% to PLN 57.0000, and Dekpol with an increase of 5.48% at PLN 80.8000.
A look at the situation in Europe
A clear downward trend dominated on European stock markets. CAC40 decreased by 0.17%, reaching 8,110.73 points, while DAX lost as much as 0.70%, falling to 24,061.49 points. This was a signal that the German market reacted more strongly to concerns about the economic situation in the euro zone. The FTSE MIB remained relatively stable with a minimal decline of 0.12%, while the IBEX35 declined by 0.61%. UK100 lost 0.74%, which – as mBank BM economists pointed out – could have been the result of pressure on the raw materials sector and uncertainty related to the monetary policy of the Bank of England.
Macroeconomic data show a mixed picture. In the UK, the unemployment rate remains at 5.1%, in line with the forecast, but the number of applications for unemployment benefits increases to 20,100, which may signal a deterioration in the situation on the labor market. In the euro zone, the PMI for manufacturing falls to 49.2, below the forecast, which confirms the weakness of the sector, while the PMI for services falls to 52.6, also below expectations, which may indicate a slowdown in economic activity. In the US, data from the labor market are mixed – employment in the non-agricultural sector increases by 64,000, above the forecast, but the unemployment rate increases to 4.6%, which may raise concerns about the durability of the improvement. PMI indices in the US also disappoint – industrial falls to 51.8 and services to 52.9, both below forecasts, which suggests weakening economic dynamics – it was added.
