(News Bulletin 247) – Tormented by chronic plateau inflation, supported in particular by recurrent firmness in crude prices, the Paris market closed Wednesday’s session in red territory, on the eve of the outcome of a new Council of the Governors of the European Central Bank. The operators will therefore have this Thursday at 1:45 p.m. the monetary policy decisions themselves, and will have to deal with the highly anticipated press conference at 2:30 p.m. The CAC 40 lost 0.80% on Wednesday to 6,448 points.
If the status quo on the rates themselves is acquired, the operators will inevitably want to know more about the intentions and the degree of aggressiveness for the July deadline.
For Frederik Ducrozet, Head of Macroeconomic Research, and Nadia Gharbi, Senior Economist, of Pictet Wealth Management, “the scenario of a 50 basis point hike will remain on the table. As we expect the ECB to opt For the safer option of a 25 basis point hike in July, recent inflation data has raised the likelihood of a move by 50 basis points. Ms. Lagarde did not explicitly rule out this option, neither did Philip Lane, although the chief economist backed a “gradual” normalization process in the form of a “benchmark pace” of 25 basis point quarterly hikes.”
For César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management, it is difficult to decide: “we are forecasting a rise of 25bp in July, knowing that a rise of 50bp in September seems more likely. In order to counter a major risk linked to its monetary normalization cycle, the ECB could introduce a mechanism aimed at limiting the widening of peripheral bond spreads.
On the values ​​side, Danone suffered the largest drop in the Parisian index (-2.72% to 53.98 euros), followed by Pernod Ricard, the spirits group yielding 2.5% despite an upward adjustment of its objectives within the range indicated above. Orange, Air Liquide and Legrand lost more than 2% at the close. The retirement home sector was once again under pressure on the Paris Stock Exchange. The Korian group (-9.51%) is the target of several complaints filed by families of residents while searches were carried out at the headquarters and in the regional offices of Orpea (-3.13%), reveals Le Parisien.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in the red, with the Dow Jones losing 0.81% to 32,910 points and the Nasdaq Composite 0.73% to 12,086 points. The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, lost 1.08% to 4,115 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0710. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $122.00.
On the agenda this Thursday, to follow in priority the European monetary policy decision at 1:45 p.m. and the ECB press conference at 2:30 p.m. No deviation from the consensus is to be noted on the monthly increase in average hourly wages, published at 07:30 this morning.
KEY GRAPHIC ELEMENTS
The major test that we mentioned at the end of last week, namely the confrontation of prices with a bearish slant, is still not finished, in the sense that we do not yet have confirmation, either of a pullback, or of reintegration. Once again, today’s session will be instructive in this respect. The combination of “evening star” candles (May 27, 30 and 31), however, invites you to be on your guard. It didn’t stack on Thursday – it was our fear – with a combination of three black soldiers. This suggests a short drift in the immediate future, during which the dynamics of the volumes will be scrutinized. Note that the failure to cross 6,600 points on Monday reinforces this technical level in its role of chart resistance. We have represented it in bold.
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.
This bearish scenario is valid as long as the CAC 40 index is trading below the resistance at 6600.00 points.
Hourly data chart
Chart in daily data
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