(News Bulletin 247) – The CAC 40 ended a bull run (-0.37% to 6,184 points on Wednesday), the appeasement that prevailed at the start of the week after reassuring remarks from two Fed officials on the expectations for a rise Federal Reserve rates now fizzling out. Operators now fear the repercussions of a reduction or worse of a total stoppage of Russian gas supplies on the growth of countries dependent on the Nord Stream 1 gas pipeline, the reopening of which is expected on Thursday. A halt in Russian gas deliveries to Europe would indeed cut the value of German GDP by almost 5% between 2022 and 2024, according to forecasts from the International Monetary Fund (IMF) published on Wednesday.
Operators are also turning to Ms. Lagarde, President of the European Central Bank, who is completing a Board of Governors on Thursday.
“For the first time in nine years, the ECB has the courage to raise all key interest rates by 25 basis points,” notes Ulrike Kastens, Europe economist for DWS, who believes that “the bank will include in its announcement the normalization of monetary policy, i.e. further interest rate measures later this year. This tightening could be all the more pronounced as the program announced to combat the so-called fragmentation of the euro area is engaging. The existence of fragmentation, i.e. an “unjustified widening of yield spreads”, is the subject of much debate. However, the ECB considers that such an instrument is necessary to avoid a crisis situation like in 2011 and 2012.”
But a “last minute surprise”, namely a 50 basis point hike, remains possible for Frederik Ducrozet (Pictet WM) in particular because “the pressure could be part of the ongoing negotiations on the anti -fragmentation.” and because the Governing Council may have received early evidence of a sharp rise in inflation expectations from the ECB’s Survey of Professional Forecasters (SPF).”
On the values ​​side, Carrefour limited its gains to 0.68% at 17.105 euros, the distributor signed an agreement to sell its 60% stake in Carrefour Taiwan to Uni-President, its “long-time partner and co-shareholder”. Publicis won for its part 1.8%, supported by the quarterly performance of its American competitor Omnicom.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session up, like the Dow Jones (+0.15% to 31,874 points) or the Nasdaq Composite (+1.58% to 11 897 dots). The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, eroded 0.59% to 3,959 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 $1.0225. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $99.15.
To follow as a priority on the statistical agenda this Thursday, the decision on European monetary policy at 2:15 p.m. and the press conference of the Institution at 2:45 p.m. On the American side, to follow the weekly registrations for unemployment benefits and the Philly Fed manufacturing index at 2:30 p.m.
KEY GRAPHIC ELEMENTS
The painting (its 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. After a phase of congestion, a rally of 6,200 points was operated, with cleaning of the remainder of the gap of June 13th.
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 6325.00 points would revive the tension in the purchase. While a break of 5900.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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