CAC 40: Anxiety before PMI activity indicators

(News Bulletin 247) – Once again, the rebound attempt will have fizzled, the CAC 40 dropping 0.81% to 5,916 points on Wednesday. An opening in the red is looming this Thursday, the day after J. Powell’s first half-year hearing before parliamentarians, and while the risk of recession on both sides of the Atlantic is a specter that takes on more and more consistency as monetary policies become firmer.

“The greatest fear, perhaps in certain prices, is the possible contraction of activity in the year to come,” said Sebastian Paris Hoervitz (LBPAM). Indeed, the shocks, which most economies in the world are experiencing, are stronger than expected. First of all, the war in Ukraine continues to weigh on energy prices, while we realize that the constraints on the supply of fossil fuels are likely to keep prices higher than expected. . This unsurprisingly exacerbates the inflationary pressures already present and therefore reduces the purchasing power of households.

Dissension over how to deal with Russia’s invasion of Ukraine and how to handle the issue of energy supplies is also worrying. “Across Europe, countries are activating emergency energy plans, including reactivating coal-fired power plants. Even the Greens are finally admitting that a clean energy transition is incompatible with the short-term goals of a green economy. war,” said Jeffrey Halley, an analyst at Oanda. If Russian gas imports continue to fall, a recession in Europe could ensue, blowing new headwinds for global growth and giving the ECB some additional stagflation headaches, he added.

On the securities side, compartment A of the listing (large caps) saw some of its representatives lose more than 5% on Wednesday, like Vallourec (-5.21%), Somfy SA (-5.22%), Rexel (-5.41%), Derichebourg (-5.66%), Elior (-6.15%), Eramet (-7.10%), and Carrefour (-7.16% to 16.98 euros) , red lantern.

On the other side of the Atlantic, the main equity indices symbolically closed in red territory, far from their respective session highs, like the Dow Jones (-0.15% to 30,483 points) or of the Nasdaq Composite (-0.15% to 11,053 points). The S&P 500, the benchmark barometer of risk appetite in financial markets, fell 0.13% to 3,759 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 $1.0560. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $104.60.

To follow as a priority on the statistical agenda this Thursday the weekly registrations for unemployment benefits in the United States at 2:30 p.m. The day will also be marked by valuable activity indicators: the PMI (IHS) as first estimates for the current month. The synthetic scores for the Euro Zone will be published at 10:00 am.

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 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 6038.00 points.

Hourly data chart

Chart in daily data

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