(News Bulletin 247) – Week decidedly once again for the less complicated on the Parisian market, whose flagship index (the CAC 40), closed in contraction of 0.56% to 5,883 points Thursday, under the effect between others with a battery of disappointing activity indicators. The ability to react this Friday will be tested, while the index is expected to rise at the opening in the wake of Wall Street. If it were to erase its opening gains and then close near the weekly lows, the bearish message would be reinforced, with a likely acceleration of the purge for the coming weeks.
“Investors as a whole fear interest rate hikes, a fortiori when they are numerous and increasingly strong, because this is often the harbinger of a weakening of growth or even a recession in activity and corporate profits”, for the strategists of Crédit Mutuel AM. “This deteriorated market situation should continue for a few more weeks or months, but it could also depreciate further if other bad news and/or surprises were to disturb investors.”
Investors who had to deal yesterday with a salvo of activity indicators (the famous PMI, surveys of purchasing managers), all off target… In summary data for the entire Euro Zone , the manufacturing PMI (very first estimate) came in at 52.0 in June, dangerously close to the 50-point mark which, by construction, separates a contraction from an expansion in the sector in question. For services, the score comes out at 52.8 against 55.6 expected.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, added the following: “Economic growth in the euro zone showed signs of flagging in June, as the impact of the thaw in demand accumulated during periods of confinement starting already fading, under the effect of the sharp increase in the cost of living and the fall in consumer and business confidence […]. “Inflation rates have indeed remained at pre-pandemic levels, and the latest survey results point to a worrying acceleration in cost inflation in the services sector. However, the moderation in demand observed recently seems to have already favored a slowdown in the rise in the prices of manufactured goods, a trend giving hope that the peak of inflation will soon end.”
On the values ​​side, the star on Thursday was Atos (+6.18% to 13.40 euros) while the Ministries of the Economy and the Armed Forces would be maneuvering to give every chance to a union between the defense giant Thales and Atos, according to information from BFM Business. Valneva is suspended from trading pending a statement. On the downside, the week is decidedly heavy for files like Faurecia (-6.65% to 19.305 euros), Elior (-6.98% to 2.186 euros), or Air France (-6.98% to 1.2060 euros) .
On the other side of the Atlantic, the main equity indices rebounded somewhat on Thursday on bargain purchases. If the Dow Jones gained 0.64% to 30,677 points, the Nasdaq Composite, with strong technological “coloration”, gained 1.62% to 11,232 points. The S&P 500, the reference barometer of appetite in the eyes of fund managers, rose 0.95% to 3,795 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 $1.0540. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $104.70.
To follow as a priority on the statistical agenda this Friday, the revised data of the American consumer confidence index (U-Mich) at 4:00 p.m. To follow earlier in the day, at 10:00 the IFO index of the business climate in Germany.
Note for holders of positions on the DR: the monthly liquidation will take place at the end of the session on Monday, June 27.
KEY GRAPHIC ELEMENTS
The sell signals have multiplied since the combination of “evening star” candles (May 27, 30 and 31). The openings successively in bearish gap of the last two sessions of week 23, then of the first session of week 24, were accompanied by a continuous mobilization of the selling side during the session and closing on the low points of the session. All in sharply rising volumes. The momentum of participation will have followed that of the clearings, even as the CAC will have re-entered the lower part at a bearish slant that retains its resistance attributes. The picture is dark. The impossibility of quickly regaining the gaps mentioned, militates for a continuation of the movement. We specify at the end of last week as a reminder: “The closing of the day this Friday compared to the low point of the week will be scrutinized, because potentially rich in lessons.” It is clear that the weekly lows were hit on Friday, degrading the weekly candle for the second time in a row. The technical rebound that began on Monday and Tuesday remains at this anecdotal stage in view of the accompanying transaction volumes.
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 5988.00 points would revive the tension in the purchase. While a break of 5880.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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