(News Bulletin 247) – New session of sharp decline on Thursday on the Nasdaq Composite (-2.84% to 10,737 points) the day after a sharp rise on a easing movement on the yields of 10-year government bonds, barometer of essential work. Intense nervousness, in a context of galloping inflation, which the Fed is facing with a belligerent attitude (hawkish), even if it means slowing down economic activity. Precisely, this prospect of a restrictive monetary policy for the coming months is reinforced by the publication, just now, of PCE inflation (Personal consumption expenditure price index), the Fed’s preferred measure of inflation. However, prices have once again exceeded the values expected on average by the economists and analysts surveyed.
Very firm, Treasuries 10-years did not overreact to the news, however, remaining at a level close to 3.73%. As a reminder, they made an incursion beyond 4% two days ago.
Tensions on interest rates are bound to rise and – isn’t that the almost avowed goal? – weigh on growth. But to what extent? “This is a major unknown” for Jean-Marie MERCADAL, Deputy Managing Director in charge of management and Eric BERTRAND, Deputy Managing Director and Director of OFI AM Management. “There is currently a lag between the strength of the labor markets, with rather low unemployment rates, and the rapid deterioration of the leading indicators of the economy. Several explanations can be put forward: companies have until now financial situations rather healthy, so much so that they do not lay off workers because of the subsequent difficulty in finding qualified labour.This shortage, which generates wage increases, is moreover one of the major concerns of fed.”
KEY GRAPHIC ELEMENTS
On the graphic, technical and chartist side, the 11,460 points, put under surveillance, dropped, in conditions of volatility and volumes giving credence to the bearish message. A break in the chartist neck line is fully validated, giving the signal to enter a new working base, between 10,560 and 11,460 points. Very quickly the oscillations melted in the heart of this zone. A nervous phase translated by hatching in short tidy is the preferred option for future sessions.
FORECAST
In view of the key chart factors that we have identified, our opinion is neutral on the Nasdaq Composite index in the short term.
We will take care to note that a crossing of 11460.00 points would revive the tension in the purchase. While a breakout of 10560.00 points would revive selling pressure.
CHART IN DAILY DATA
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