CAC 40: The 6000 points, a technical safeguard

(News Bulletin 247) – The CAC 40 suffered a session of great volatility yesterday. A time struck by the firmness of the tone adopted by Christine Lagarde at a press conference, materializing the end of a Board of Governors under high tension in the midst of a gas shock in Europe, the flagship Parisian index gradually recovered, in particular with support from financials and the technology sector, to finally close in extremis in positive territory (+0.33% to 6,125 points).

The powerful Frankfurt Monetary Institution raised its key rates by 75 basis points, as widely anticipated by trading rooms. But the ECB has also revised upwards its inflation forecasts. The harmonized consumer price index should thus increase by 8.1% in 2022 then 5.5% in 2023 and 2.3% in 2024, i.e. still above its inflation target of close to 2%. . Expectations that risk complicating the task of the ECB to contain inflation at its highest, prices having climbed in August to a record level of 9.1% over one year in the zone.

“The hawkih rhetoric on inflation and inflation expectations shows that the ECB will continue to tighten policy aggressively in the short term” for Nomura strategists. “Therefore, we change our minds for October and December, and now expect 75bp at both meetings (previously 50bp at both), and still expect a final 25bp in February 2023,” they anticipate.

Surrounded by prospects of increased profitability, mechanically via rates, CAC financials (banks, insurance) ended the session particularly well, like Crédit Agricole (+ 1.36% to 9.212 euros) , BNP-Paribas (+1.99% to 47.44 euros), Societe Generale (+2.62% to 23.07 euros), and Axa (+2.78% to 24.38 euros). Outside the CAC 40, the digital services company Atos suffered the full brunt of a rating from Goldman Sachs which downgraded its opinion to sell on the file. The title showed the largest drop in the Parisian SRD with a decline of more than 15% to 8.80 euros this Thursday evening.

On the other side of the Atlantic, the main equity indices ended in the green, within relatively narrow margins, but at their session high for the second time in a row, signaling the start of a rebound phase. challenge, like the Dow Jones (+0.61% to 31,774 points) or the Nasdaq Composite (+0.60% to 11,862 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.66% to 4,006 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 $1.0070. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $83.80.

To follow as a priority on the statistical agenda this Friday, French industrial production at 8:45 a.m. and the press conference by C Lagarde at the end of the Eurogroup meeting.

KEY GRAPHIC ELEMENTS

Within a broad bearish leg, which began on August 17 on marubozu, the flagship Parisian index is in a phase of short congestion above the symbolic threshold of 6,000 points, a break in which would accelerate clearances. This break is not immediately relevant, and a breather, fueled by the files that suffered the most at the end of the summer, is anticipated.

FORECAST

In view of 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 a crossing of 6288.00 points would revive the tension in the purchase. While a break of 6000.00 points would relaunch the selling pressure.

Hourly data chart

Chart in daily data

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