(News Bulletin 247) – Risk appetite continued to contract at the end of last week, to the point that the CAC sank further below the symbolic threshold of 6,000 points. In thick volumes, the flagship Parisian index closed at its weekly lows, losing 2.28% to 5,783 points. Over the week, losses amounted to 4.84%amid rising government bond yields on both sides of the Atlantic.
To end a tense week on the monetary front, marked by the belligerent tone of the Fed’s FOMC on Wednesday, traders had to deal with unattractive PMI activity indicators on Friday. The “scores” remain significantly below the 50 point mark which separates, by construction, a contraction from an expansion of the sector in question. The disappointment is particularly strong for the services component in Germany alone, at 45.4 in preliminary data for the month of September, completely missing the target. For synthetic data across the Euro Zone, at 48.5 for industry and 48.9 for services, the leading indicator sends a pessimistic message.
On the stock side, it is the sector with a very strong current Beta effect of automotive equipment manufacturers that has paid the highest price, like Valeo (-10.25% to 16.065 euros) or Faurecia (-11.50% to €12.165).
On the other side of the Atlantic, the main equity indices once again lost a lot of ground on Friday after a trying week, like the Dow Jones (-1.62% to 29,590 points) or the Nasdaq Composite (-1.80% to 10,867 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 1.72% to 3,693 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 $0.9620. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $78.30.
To follow as a priority on the statistical agenda this Monday, the IFO index of the business climate in Germany at 10:00 a.m.
Note, for holders of positions on the DR: the monthly liquidation will take place at the end of the session on Tuesday, September 27.
KEY GRAPHIC ELEMENTS
The symbolic 6,000 points were broken under validating conditions of volume and volatility, and the new work zone identified between 5,785 and 6,000 points will have been crossed in one go last week. At this stage, the possibility of a technical reaction will take shape. We lack the materialization of the conditions for its implementation (candle in harami or sharp downward acceleration from the start of the session). In any case, high volatility is still to be expected this week.
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 6000.00 points would revive the tension in the purchase. While a break of 5360.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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