(News Bulletin 247) – Note in the preamble that Wall Street (NYSE and Nasdaq) will be closed on Monday, due to a public holiday (Juneteenth), and this for the first time in its history.
After an unsuccessful attempt to regain the psychological threshold of 6,000 points on Friday, the CAC 40 ended the session in equilibrium, but symbolically in the red (-0.06% to 5,882 points). The week, marked by a series of disappointments on the front of macroeconomic publications and by a ball under high tension of the main central banks of the planet, saw the three-color flagship index falter by nearly 5%. Industrial heavyweights will have lost considerable ground throughout the week, such as Engie (-8.19%), Renault (-8.73%), Arcelor Mittal (-8.95%) , TotalEnergies (-9.47%), or Saint Gobain (-13%). The Parisian place posted its worst week since the week following the launch of the Russian offensive in Ukraine. Above all, the CAC 40 has officially entered the “Bear Market”, ie it has fallen by more than 20% since its peak on January 5th.
“The hypothesis of witnessing a brutal tightening of American monetary policy weighed heavily on the equity markets”, summarizes BNPPAM in a market note. “At a time when they are emerging, more or less gradually, from the exceptional monetary policies put in place to fight the pandemic, central banks remain attentive to the reactions of investors. The fight against inflation has once again become the essential element of their function. of reaction, but there would be no point in provoking a new crisis.”
In terms of macroeconomic statistics, while no deviation from the target was to be reported for the consumer price indices in the Euro Zone (+8.1% in annualized data on the expanded basket of products), a disappointment to report once again this week across the Atlantic with the monthly federal report on industry, both in terms of production volume (+0.2%) and the rate of use of productive capacities (79%).
On the other side of the Atlantic, transition session on Friday, with a slight contraction in the Dow Jones with the ebb in crude (-0.13% to 29,888 points), and a protest reaction from the Nasdaq Composite, at strong technological “coloration” (+1.43% to 10,798 points). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, eroded 0.22% to 3,674 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 $1.0530. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $110.00.
To follow in priority on the statistical agenda this Monday, a hearing of Mrs. Lagarde, President of the ECB, before the European Parliament.
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.
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 6122.00 points.
Hourly data chart
Chart in daily data
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