(News Bulletin 247) – The atmosphere remains heavy on the Paris market, in the midst of (difficult) digestion of the last federal report on American employment, which, far from being bad in itself, has campaigned for an uninterrupted continuation of the aggressive Fed monetary policy. The CAC 40 index lost 0.45% to 5,840 points on Monday, in a session where benchmarks on Wall Street made a little less sense than usual, due to a public holiday (Columbus Day), unemployed for most of the country’s economic activities, but not on the NY Stock Exchange.
As a reminder regarding the main lessons of this NFP (No Farm Payrolls) published on Friday, the dynamics of wage increases did not take off (+0.3% monthly in September), but the increase in job creations in the private sector (excluding the agricultural sector) surprised by its pace , to +263,000. The unemployment rate – this was not in the Fed’s plans either – contracted sharply to 3.5% of the labor force, against a consensus of 3.7%. The change in total non-farm payroll employment for July was revised up by 11,000 from +526,000 to +537,000, and the change for August remained at +315,000. Employment in July and August combined was 11,000 higher than previously reported.
“Once again the positive news on the economic front in the United States dissipated the euphoria of the beginning of the week to give way to strong tension on sovereign rates. Once again, in this very unique period, “good news is bad news”, deciphers Thomas Giudici, co-head of bond management at Auris Gestion.
Yesterday, the growing risks of seeing the main economic poles in the Euro Zone go through the recession box penalized risk appetite, especially with the publication of a Sentix index of investor confidence at its lowest since May 2020… The barometer value indicator sank to -38.3, missing yet pessimistic expectations, to the lowest since June 2020. “The continuing uncertainties about the gas and energy situation in winter have not diminished due to the attack on the Nordstream pipelines. In addition to economic worries, there is now also a growing likelihood of an escalation of the military conflict in Ukraine. Overall, there is little reason for hope “, can we read on the cold and laconic commentary accompanying the publication of the firm specializing in behavioral finance.
In terms of values, Renault shares retained their lead (+2.4%), reacting to press reports that the French car manufacturer was in discussions with its partner Nissan about the restructuring of their alliance. Casino ended down 3.10% while Standard & Poor’s downgraded the long-term credit rating of the Saint-Etienne distributor this weekend. The rating agency points in particular to Casino’s difficulties in honoring its financial commitments, against the backdrop of deteriorating refinancing conditions.
On the other side of the Atlantic, the main equity indices once again closed in the red, albeit in relatively timid volumes. While the Dow Jones contracted only slightly (-0.32% to 29,202 points), the technology-dominated Nasdaq Composite lost 1.04% to 10,542 points. The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, lost 0.75% to 3,612 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 $0.9690. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $90.70.
To be followed in priority on the statistical agenda this Tuesday, Italian industrial production at 10:00 a.m., and the NFIB index of small American companies at 12:00 p.m. The next big meeting this week is to be ticked off for tomorrow with the Minutes of the Fed, traditional supported report of the last FOMC meeting. The opportunity for the market to gauge the will of the powerful monetary institution to continue on the path of firmness…
KEY GRAPHIC ELEMENTS
The protest reaction that began on September 30 has emptied its energy reservoir, the October 05 harami having been confirmed by a close on Friday at the October 04 opening level.
Yesterday we mentioned a “danger”, at this stage, that of the opening under the gap of October 04, graphically isolating four sessions, subject to the preservation of the gap at the close on Monday. However, the index came during the session to fully fill its opening gap. No remainder of the October 4 gap is visible.
These elements militate for a continuation, in decreasing volatility, of a decline towards 5,640 points, after which a short reaction is possible.
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 6000.00 points.
Hourly data chart
Chart in daily data
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