(News Bulletin 247) – In low volumes due to the lack of benchmarks from Wall Street, closed for Independence Day, the Paris market ended up slightly on Monday, by 0.40% at 5,954 points for the CAC 40, now completely erasing the bearish gap of June 30. A drift around 6,000 points – the technical issue of the week – is the preferred option on Tuesday, in a market matrix that basically does not change: concerns about a possible entry into recession of the main economic poles of the planet are growing, as prices continue to rise.
“Fears of a marked slowdown even lower expectations for a rise in key rates by the end of 2022 by around 40 bps for Fed funds and the ECB’s deposit rate compared to mid- June 2022”, note the Ecofi strategists, partly explaining the break in the ebb, and especially the absence of an abdication movement. “The improvement in the health situation in China, and therefore better fluidity in the production chains, brings hope. However, the persistence of the conflict in Ukraine, with the sword of Damocles hanging over Europe from one cut in gas supply, constitutes a major risk both in terms of growth and inflation.
Information from the Wall Street Journal that Joe Biden could reduce certain customs duties on imports of Chinese products also relieves the rating at this stage.
In statistical terms, the Sentix index of investor confidence in the Euro Zone deteriorated further, from -15.8 to -26.4, missing expectations. And the producer price index in the Euro Zone came out at +0.7% in May, on a monthly basis.
On the values ​​side, TotalEnergies ended the session at the top of the CAC 40 thanks to an increase of 4.55% to 12.35 euros in the wake of the rebound in black gold. Technip Energies grew by 4.8% as the group won an engineering and supply contract for the carbon storage unit of the Klemetsrud waste-to-energy plant in Oslo, the first and largest plant in this guy in the world. Sodexo rose for the third session in a row in the wake of its recent quarterly publication, adding another 4% to its previous gains, while analysts review the case with a more positive bias like Oddo BHF which gives a slight boost to its target (from 80 to 82 euros). Elior this time did not follow, closing down 4.3%.
Recall that Wall Street remained closed on Monday (4th of July, Independence Day). On Friday, the main equity indices ended Friday’s session in the green, like the Dow Jones (+1.05% to 31,097 points) or the Nasdaq Composite (+0.90% to 11,1217 points) . The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.06% to 3,825 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 $1.0430. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $110.2.
To be followed as a priority on the statistical agenda this Tuesday, a battery of activity indicators in services in Europe this morning (summary data for the Euro Zone at 10:00 a.m.) and orders for American industry at 4:00 p.m.
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.
For the time being, however, and on the scale of a handful of sessions, the opinion is neutral.
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 6000.00 points would revive the tension in the purchase. While a break of 5860.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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