(News Bulletin 247) – Over the whole of a particularly bumpy week, the CAC 40 will have lost 2.34%, breaking the symbolic threshold of 6,000 points, against a backdrop of fear of an entry into recession of the main economic poles of the planet. Jerome Powell, the president of the central bank of the United States, admitted on Wednesday that there is a risk of doing too much in terms of monetary tightening, but that he prefers to run this risk rather than that of letting slip more surge in prices. No guarantee that the Fed will manage to avoid a recession in the battle… This week should in any case start calmly in the absence of benchmarks from Wall Street, which will remain closed for a holiday (4th of July , Independence Day).
Operators had to contend on Friday with the final data of the PMI index (IHS Markit) for the month of June, in the Euro Zone, published at 52.1, a very slight increase compared to the first estimates. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence provided the following additional insights into the raw data: and lower-than-expected sales suggesting that an inventory correction will act as an additional drag on the manufacturing sector.Supply of many important inputs also remains constrained and concerns over energy and food supplies have added to jitters over in the future.”
Inflation in the Euro Zone came out at +8.6% at an annualized rate in the Euro Zone, in very early estimates for the month of June, against a target of +8.5%. Disappointment on the other side of the Atlantic with the ISM manufacturing index, which fell to 53.0, missing expectations and heading more towards the 50-point threshold, which separates a contraction from an expansion in the sector in question.
On the values ​​side, a few files have pulled out of the game like Sodexo (+4.06% to 69.78 euros), after a third quarter better than expected and confirmed its outlook. In its wake, Elior gained 3.5%. Oncondesign, whose listing will resume today, has presented a plan to separate its activities with a takeover bid on the services branch. FDJ fell 4.6%, while Citigroup downgraded its advice on the action citing the risk of a European decision leading to a (sharp) increase in the amount that the company had paid to the State in consideration for obtaining 25-year exclusivity over the organization of lottery games in France.
On the other side of the Atlantic, 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% at 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 $108.9.
To be followed in priority on the statistical agenda this Monday, the Sentix index of investor confidence at 10:30 am, and the producer price index in the Euro Zone at 11:00 am.
KEY GRAPHIC ELEMENTS
The picture 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 positive.
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is above the support at 5860.00 points.
Hourly data chart
Chart in daily data
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