(News Bulletin 247) – Taking advantage of favorable market information from China, and less aggressive content from the Minutes than expected, the equity market picked up a bit on Thursday, with the CAC 40 managing to win an increase of 1.60% to 6,006 points.
This is a report from Bloomberg that China’s finance ministry is considering allowing local executives to sell 1.5 trillion yuan ($220 billion) of special bonds this year, sparking a unprecedented acceleration of infrastructure financing.
Moreover, the hypothesis of a 50 basis point increase in Fed Funds is still on the table, the Minutes published on Wednesday evening not formally excluding it, even if the scenario of a further 75 basis point increase , which until then held the rope, remains entirely possible.
In terms of statistics, while the monthly trade balance (May) saw its deficit point to levels very close to the target, weekly claims for unemployment benefits are proving relatively disappointing, at 235,000 new units.
On the stock side, the renewed appetite for risk benefited throughout the session, to cyclical stocks such as Stellantis (+7.30%), Alstom (+7.02%), Renault (+6.10% ) or ArcelorMittal (+5.5%). TotalEnergies (+3.6%) accelerated upwards, as did oil services companies such as Vallourec (+6.9%), in the wake of the 5% rebound in black gold, fears of a breakdown of supply having taken precedence over those concerning a slowdown in demand. On the techno side, STMicroelectronics took advantage of the reassuring half-years of the giant Samsung Electronics and gleaned 2.85%.
On the other side of the Atlantic, the main equity indices ended the session in the green, with an amplification effect for the Nasdaq Composite (+2.28% to 11,621 points). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, gained 1.50% to 3,902 points and the Dow Jones 1.12% to 31,384 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 $1.0160. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $102.80.
To follow as a priority on the statistical agenda this Friday, the figures for the French trade balance at 8.45 a.m. as well as the federal monthly report (NFP for No Farm Payrolls) for the month of June in the United States. The opportunity for the Fed to gauge the tensions on the job market and to “probabilize” more finely the scenarios of entry into a price/wage spiral.
KEY GRAPHIC ELEMENTS
The picture (the backdrop in any case) is dark.
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 technical rebound that began during the week (W25) remains anecdotal at this stage in view of the transaction volumes accompanying it and in view of the initial losses. It came to an early halt, and the resumption of selling pressures, on gaps, on breach of the symbolic threshold (6,000 points), and in high volumes, augurs a continuation of clearances.
Tuesday, July 05, the traced candle combines worrying characteristics, its structure with an elongated body without a wick, materializing a mobilization of the selling camp throughout the session, all in relatively heavy volumes, and on breaking the technical threshold.
The flagship index achieved a pullback (graphic rejection) of school on the 6,000 points.
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 6325.00 points.
Hourly data chart
Chart in daily data
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