(News Bulletin 247) – The violent ebb that began on August 17 continues, with significant volatility, as risk appetite dries up. The market remains weighed down by the gas crisis in Europe, and the declared desire of the leaders of the major central banks to fight against chronic inflation, even if it means slowing down economic activity. The CAC 40 lost 1.48% to 6,034 points yesterday, in volumes fed, weighted by aeronautics and technology, in particular. Thalès lost 2.21% to 117.50 euros, Safran 2.38% to 99.47 euros, Airbus 2.98% to 94.97 euros, Dassault Systèmes 3.20% to 37.34 euros.
The market remains groggy after the publication this week of inflation figures for the Euro Zone, figures in double digits for many members of the Monetary Union. As a reminder, 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 by 4.3%, against 4.1% expected, causing pressure on all risky asset classes.
Operators are gradually turning to the NFP report (for No Farm Payrolls), or the federal monthly report, which will be published this Friday (2:30 p.m.). It will make it possible to gauge the degrees of persistent tension on the job market, the measure being important as a leading indicator of inflation. Earlier in the week, the private firm ADP gave a taste, highlighting the creation of 132,000 new positions, well below the consensus (300,000). And this while the need for hiring is growing.
To be statistically complete, yesterday the manufacturing PMI (ISM) came out at 52.8, slightly above expectations. On this side of the Atlantic, on the other hand, the battery of industrial PMI indicators came out in line with expectations for the whole of the Euro Zone, slightly disappointing for Germany. The indicator is nevertheless below the 50 point mark, at 49.6, which marks a contraction in secondary activity.
On the other side of the Atlantic, the main equity indices finished well off their respective session lows, thanks to a timid technical reaction. If the Dow Jones even managed to finish in positive territory (+0.46% to 31,656 points), the Nasdaq Composite once again finished in the red, albeit in low proportions (-0.26% to 11,785 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, managed to climb 0.30% to 3,966 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 $0.9970. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $87.90.
To follow as a priority on the statistical agenda this Friday, the NFP report on American employment at 2:30 p.m. (unemployment rate, average hourly wages, job creations in the non-agricultural private sector). To follow the producer price index at 11:00 am for the Euro Zone.
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 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.
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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