(News Bulletin 247) – First of all, note that despite the holiday nature of this Monday (Pentecost), the Paris market is open, under the usual conditions of hours and quotation.
The gains glimpsed at the start of the session on Friday on the CAC withered during the session, then canceled, before closing in the red (-0.23% to 6,485 points), under the influence of Wall Street which had to coping with a flat monthly job report. Certainly the NFP (Non Farm Payrolls) will not have betrayed additional signs of tension on employment (dread of the Fed), but its content will not have made it possible to support the rating. In detail, this NFP report highlights 390,000 creations in the private sector, well beyond expectations, but a stable monthly increase in wages (+0.3% against 0.4% expected), and a rate of unemployment stable at 3.6%, while many sectors especially in logistics services.
To be complete on the statistical front, the PMI services in the Euro Zone came out, in final data for the month of May, at 56.1, very close to the first estimates. The “composite” data, including the industrial component published earlier in the week are therefore available. At 54.8, this data marks an expansion in activity, but which is “starting to lose momentum”.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence comments on the latest figures from the PMI survey: “However, the growth outlook for the coming months seems to be on the decline. Shortages of raw materials indeed continue, worryingly, to limit activity in the manufacturing sector, while businesses and households continue to face soaring costs. The economic rebound linked to the thaw in demand for services after the lifting of health restrictions is also showing signs of losing momentum.
The decline in confidence to one of its lowest levels since the start of the pandemic and the implementation of the first confinements is therefore not surprising, with fewer and fewer companies anticipating an increase in their activity in the next twelve months. The evolution of the economic situation in the region will therefore depend on the ability of the current rebound in demand (which already seems to be easing) to counterbalance the strong headwinds blowing on the economy, namely the geopolitical uncertainty resulting from the war in Ukraine, supply tensions and the rise in the cost of living, which will most certainly be exacerbated by the tightening of monetary policy. The coming months therefore promise to be very difficult for the region and it is for the time being, despite the encouraging pace of growth in the services sector, it is impossible to rule out the possibility of an imminent contraction of the economy. »
On the other side of the Atlantic, the main equity indices closed Friday’s session in red territory, like the Dow Jones (-1.05% to 32,899 points) or the Nasdaq Composite (-2 .47% at 12,012 points). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, lost 1.63% to 4,108 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 $1.0720. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $119.00.
On Monday’s agenda, the Chinese Caixin PMI for services, published overnight and came out well below expectations at 41.4.
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 reinstatement. Today’s session will be instructive in this regard. The combination of evening star candles, however, invites you to be on your guard. It did not combine on Thursday – it was our fear – with a combination of three black soldiers, suggesting a short drift, during which the dynamics of the volumes will be scrutinized.
FORECAST
In view of the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that a crossing of 6602.00 points would revive the tension in the purchase. While a break of 6330.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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