(News Bulletin 247) – A while reassured by the content of the NFP (Non Farm Payrolls) report, i.e. the monthly federal report on employment, the CAC 40 showed strength in its rebound in protest on Friday (+2.21 % at 6,167 points). But the pre-opening data on Monday augurs the crossing of a new air pocket, in full gas shock, with the approach of the Council of Governors of the ECB and even though Wall Street will remain closed due to a day public holiday (Labor Day).
The employment report once again revealed strong tensions, albeit less strong than anticipated. The unemployment rate rose slightly to +3.7% of the active population, which remains close to full employment, but augurs well for a larger labor pool. Hourly wages (+0.3%) are not slipping, even slowing their rate of increase, and job creations in the private sector (excluding agriculture) exceed expectations at 315,000 creations.
But the prospect of major monetary tightening this week is already making the mood tense. As a reminder, the latest inflation figures published last week agree with the firm tone of the latest report from the Board of Governors of the European Central Bank. The consumer price index in the monetary union accelerated beyond expectations, to +9.1% at an annualized rate. Excluding food, energy, alcohol and tobacco (volatile elements), prices rose 4.3%, against 4.1% expected, causing pressure on all risky asset classes
The ECB ends its Board of Governors on Thursday. The assumption of an increase in key rates by 75 bps, to 1.25%, is gradually taking shape.
On the value side, Saint Gobain ended up 3.7% after the announcement of the sale of its “Crystals and detectors” activity and that of glass processing sites in northwestern France. The French building materials champion has been increasing sales for several months as part of its strategic plan called “Grow & Impact”. Oil stocks are recovering in the wake of the rise in oil prices: TotalEnergies appreciates by 2.2% while Technip Energies progresses for its part by 1%.
On the other side of the Atlantic, the main equity indices, after an attempt to rebalance, finally closed in red territory on Friday, like the Dow Jones (-1.07% to 31,318 points) or the Nasdaq Composite (-1.31% to 11,630 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 1.07% to 3,924 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 $0.9900. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $88.50.
To be followed in priority on the statistical agenda this Monday, a battery of activity indicators (PMI) in services in the Euro Zone, as well as the Sentix index of investor confidence in the Euro Zone.
Note that Wall Street will remain closed due to a holiday (Labor Day).
KEY GRAPHIC ELEMENTS
The immediate proximity of the close on Friday 08/26, after a sharp downward acceleration, with the weekly lows, sent a negative message. It records the validation of a figure comparable to a pattern bearish chartist with a bearish neck line, which the gap of August 22 had already sketched.
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.
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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