(News Bulletin 247) – Tormented by the Russian decision to cut off gas exports to Europe via NordStream1, the Paris market experienced a nervous session on Tuesday. The CAC owes its closing in the green only thanks to the good dispositions of Wall Street at the start of the session, after a weekend made extended by Labor Day. Wall Street which subsequently turned down, causing a bright red pre-opening this morning…
So certainly some Russian gas continues to arrive in Europe by other routes, and the Europeans did not wait for this situation to sign new contracts with other suppliers, but it is clear that additional pressure takes place, pushing the energy crisis on the Old Continent up a notch. Pressure capable of further fueling fears of a long-term inflationary framework, without a “peak”, but on a high plateau… And this before a Council of Governors of the key European Central Bank, which ends tomorrow .
“Several members of the ECB are now openly discussing the idea of a 75 basis point hike at the meeting on September 8, probably followed by a 50 basis point hike”, recalls Raphaël THUIN, Director of Capital Markets Strategies at Tikehau Capital. “Market expectations for the summer of 2023 on ECB deposit rates now stand at 2-2.25% (given as of September 2, 2022). Fighting inflation at the cost of growth therefore seems to be the new normal for central banks.”
In terms of statistics, the ISM index, which measures activity in services in the United States, stood at 56.9 points in August, after 56.7 in July, and well above analysts’ expectations. which were counting on 55.5, a sign that the American economy is holding up despite inflation and the rise in interest rates.
The slowdown in Chinese export growth, against a backdrop of shrinking global demand and the Zero Covid policy in several megacities, will further worsen the atmosphere on Wednesday.
On the values side, the automotive sector found some color on Tuesday, in the form of a technical rebound after a downward acceleration. Renault gained 2.07% to 28.335 euros, Valeo 1.61% to 17.98 euros, and Faurecia 2.77% to 13.555 euros. Conversely, the oil and oil services groups, which had behaved well on Monday, have corrected. CGG and Vallourec and TotalEnergies lost 6.1%, 5.6% and 2.8% respectively.
On the other side of the Atlantic, the main equity indices ended their session badly after 3 days off, like the Dow Jones (-0.55% to 31,145 points) or the Nasdaq Composite (- 0.74% at 11,544 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 0.41% to 3,908 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 $0.9890. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $85.40.
To be followed as a priority on the statistical agenda this Wednesday, the revised GDP data in the Euro Zone (Q2) at 11:00 am.
KEY GRAPHIC ELEMENTS
The 6,550 points definitely qualify as resistance, and we are seeing an entry into a new framework below the 50-day moving average (in orange). The candle drawn on Tuesday 08/30, if it had been built below the lows of Monday, could have evoked the imminence of a technical rebound. This is not the case. We had confirmation of this on Wednesday 08/31 with a close exactly on the monthly low points.
This Wednesday candle, in marubozu of school, responds to that of Friday 26/08, by already being well below, marking the heart of a wave of releases. Thursday, September 1’s gap sets the tone for the start of the new school year, confirming the identified market psychology. It was filled almost immediately, paving the way for further clearances. Next guardrail on the 5,785 points. Note the hourly pressure of the 50-hour moving average (in orange).
The angle in which the 20-day moving average is about to break the 50-day moving average is particularly important.
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 6308.00 points.
Hourly data chart
Chart in daily data
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