Stock indices build good mood at the beginning of the year. WIG20 makes up for it.

The first stock exchange session this year exudes optimism. European stock indices started well in 2020. The enthusiastic moods on the market are certainly partly due to the freshness that came with the new year, but also positive news from global politics ending 2019.

German index with banks at the forefront

European equity markets gained today mainly thanks to the good Asian session. The positive sentiment resulted mainly from the news about the PBOC cutting the reserve requirement ratio. The banks - Deutsche Bank and Commerzbank were the decisive winners of the session. The low interest rate environment is not very positive for companies from the financial sector, therefore, taking into account the last decade, the industry may have been doing slightly worse.

Graph DE 30 (DAX 30), interval D1. Source: xNUMX XTB xStation

The index has now exceeded the psychological level of 13330 points. DE30 has been moving practically since August in a stable upward trend. In 2019, the problem of exceeding the level of 13274,3 points lasted from November 7 practically until the end of December. For now, there is no indication that the index should suddenly turn back abruptly. Despite the still poor data from the German economy (mainly the industrial sector), DE30 is breaking new heights. Therefore, in 2020, the economic slowdown should not hit the thirties of the top thirty companies well, but we should not expect immediate improvement. World geopolitics should support improvement in German industry, but this is not the only factor that will bring revival to our western neighbors. Therefore, despite New Year's optimism, we should be quite cautious about the vision of further increases.

Good Asian session

Undoubtedly, the good moods of the Eastern sessions were shared by European stock exchanges. Already at the beginning of the new year, the People's Bank of China decided to reduce the reserve requirement rate again. They have been reduced by exactly 50 basis points. The decision will come after January 6 this year. Considering 2019, the current reduction is already 8 in the last 12 months. Thanks to it, funds worth USD 100 billion will be released, and Chinese stock indices have recorded an increase of around 1% today.

CHNComp (Hang Seng) chart, H4 interval. Source: xNUMX XTB xStation

Considering PMI publications from the Chinese economy, the situation does not look bad. Industrial PMI was at 51,5 points, which is not a weak or alarming result. Practically since mid-2019 we can observe increases on this indicator. Along with the improvement in PMI for industry, the index of new orders and production also increased.

The improvement is the result of positive news regarding the trade agreement. The first phase of the settlement will be signed on January 15. The declarations of both parties are positive, therefore the market takes the agreement seriously. This calms the uncertainty that has prevailed in the background of mainly Asian sessions and quickly brought enthusiastic bruising to these markets in 2019. Despite slight clashes regarding the dates of the settlement (the Chinese authorities wanted to sign them as soon as possible), the global stock exchanges could be relieved to start 2020.

WIG20 catches the eye

The beginning of the year on the Polish stock exchange is optimistic. WIG20 was the clear winner and leader of today's European session. Its strong increases look as if from the beginning of the new year they wanted to make up for the losses from the previous year. On the wave of global optimism, it rose by almost 1,5% about 2 hours before the closing of the session.

JSW shares were the main fuel for growth. The company gained close to 10% today. Considering the last days, it will be the fourth session in a row without any drops on the WIG20 index.

WIG20 chart, H4 interval. Source: xNUMX XTB xStation

The technical situation on the Polish index of the top twenty companies looks pretty good. Upward signal from medium (EMA 10, 40) as of December 17, did not allow prices to fall below the average price of the last 10 closing prices. Given the significant level of support located within 2175,9 points, we should expect a correction in this area in the near future.