CAC 40: The market takes the stairs to go up, and the elevator to go down

(News Bulletin 247) – The Omicron variant has come to sow uncertainty, this shrill word in the ears of the markets, even though scientists still know little about its contagiousness, its dangerousness and its ability to supplant the Delta variant. Latest statement to date, which added coldness to the atmosphere, that of the boss of Moderna, Stéphane Bancel, who told the Financial Times that the existing vaccines could be less effective in fighting Omicron than the previous variants, and that several It may take months before pharmaceutical companies can supply a suitable vaccine on a large scale.

The equation therefore seems complex for central banks whose monetary normalization process has barely begun. Their room for maneuver is also extremely limited. “Even without further restrictions, the fifth wave and Omicron are likely to impact consumer confidence and make them more cautious. Against a backdrop of rising fears of infections, we can expect a drop in consumption of healthcare services. leisure activities, such as restaurants, travel and social activities, which will have a negative impact on growth, ”said ING in a note on France.

At the same time, inflation on both sides of the Atlantic is setting in.

Published yesterday for the Euro Zone, inflation corrected for volatile elements comes out at an annual rate of 2.6%, against a consensus of 2.3%, and 2.0% for the final data of last month … Concerning the broadest product base , including energy in particular, prices jump 4.9%, according to EuroStat.

And yesterday afternoon, it was the boss of the Federal Reserve, Jerome Powell, who again cast a cold by acknowledging, in response to a question on the relevance of maintaining the term “transient” to qualify the peak inflation, that the time had come to withdraw this word … more widespread and the risk of persistently higher inflation has increased. In other words, it is a bit of the whole scenario put forward in recent months that has been demolished, and the banker recognizes that we will have to discuss a more rapid withdrawal of unconventional support measures, without even talking about a rate tightening.

Result, the CAC 40 finished down 0.81% to 6,721 points, again far from these highs of session. The benefit of rally November has now been annihilated, in a handful of sessions.

To be statistically complete, a clear decline across the Atlantic, with targets completely missed for the Chicago PMI which fell sharply to 61.8 and especially for the consumer confidence index (Conference Board), to 109.5.

On the securities side, Value files suffered the most sustained losses, like TechnipFMC, Carrefour (-3.63% to 14.62 euros), Danone (-4.31% to 51.99 euros), or even Carmila (-4.873% to 12.22 euros).

On the other side of the Atlantic, the color bright red dominated at the end of the debates on Tuesday, whatever the type of values, moreover. The Dow Jones lost 1.86% to 34,483 points and the Nasdaq Composite 1.55% to 15,537 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 1.90% to 4,567 points.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to 1,1330$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 67,90$.

To be kept on the agenda this Wednesday, as a priority, the PMI activity indicators (surveys of purchasing managers) in Europe, with summary data for the Euro Zone at 10:00 a.m., the ISM manufacturing PMI in the United States at 4:00 p.m. , just before the crude stocks (4:30 p.m.). These will be analyzed in the light of the recent ebb in prices, as Omicron weighs on the outlook for global demand and a new OPEC + meeting opens. For Vincent Boy (IG France); we will have to be “attentive to their perspective on demand, as well as comments on the timing of increases in production quotas. In addition, OPEC + could comment on the decision of the United States and other countries to put on the market part of their strategic reserves. “

KEY GRAPHIC ELEMENTS

We were awaiting the plot of the amplitude of a large figure of broad consolidation to come. This has been done since Friday, and this marked increase in downward volatility. Result: a huge bearish gap and a close on the low points of the session almost. In addition, the bullish gap of November 1 was fully filled during the session, showing the installation of the flagship index in a new framework.

PREVISION

With regard to 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 crossing 7185.00 points would rekindle the purchase tension. While a break of 6485.00 points would revive the selling pressure.

Hourly data graph

Daily data graph

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