CAC 40: The Kremlin tightens the gas tap

(News Bulletin 247) – While Russia is increasing its pressure on Europe by stopping the NordStream1 gas pipeline – activating the use of gas as a political weapon – the main equity markets experienced another session in the red on Monday. While the DAX30 lost 2.22% to 12,760 points, the CAC40 contracted 1.20% to 6,093 points, in the absence of benchmarks from Wall Street, which remained closed for one day public holiday (Labor Day). Moscow had not reopened the valves on Saturday after three days of closure of the gas pipeline for “maintenance operations”.

At least things are clear! “In response to the desire of the G7 members to establish a maximum price on oil, Russia has, in fact, announced the closure of the Nord Stream 1 gas pipeline for an indefinite period. The “stop and go” on deliveries should therefore continue, Russia cannot completely do without the European financial windfall either”, comments Thomas Giudici (Auris Gestion).

The week will be very dense on the statistical and macroeconomic front, culminating in the conclusion of a Council of Governors of the ECB (Thursday). A very large screw (75 bps) is expected by a large fringe of forex traders, which would bring the “rent” of the Euro to 1.25%. “The ECB seems determined to put the fight against inflation ahead of concerns about growth, the macroeconomic configuration remains complex and the political risks high”, summarizes Konstantin VEIT, portfolio manager at PIMCO.

Yesterday investors came to terms with two notable disappointments: the services PMI in the Euro Zone, which symbolically fell below 50 points in the final data for August, and the Sentix investment confidence index, which at -31.8, sinks further, completely missing the target.

In terms of values, it is once again the automotive sector in the broad sense (including equipment manufacturers) which was the most heavily penalized on the stock market. Equipment manufacturers have many production sites in Germany, close to their customers across the Rhine. They are therefore particularly exposed to the risk of gas rationing which could possibly be imposed on manufacturers in Germany. Stellantis lost 4.86% to 12.816 euros, Renault 5.48% to 27.76 euros, Valeo 8.27% to 17.695 euros, and Faurecia 8.94% to 13.19 euros.

As a reminder, Wall Street remained closed yesterday due to a holiday (Labour Day).

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 $0.9950. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $88.90.

To be followed as a priority on the statistical agenda this Tuesday, the American services PMI (ISM) at 4:00 p.m.

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).

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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