(News Bulletin 247) – The CAC 40 index (-1.17% to 5,866 points on Friday) ended in the red a week marked by great volatility, with operators’ emotions having experienced ups and downs, with in particular two statistical meetings: the manufacturing ISM on Monday, whose “prices paid” component caused rates to ease, and a federal employment report on Friday, which, through its palpable and chronic tensions, argued for an uninterrupted pursuit of the aggressive policy of the Fed.
Regarding the main lessons of this NFP (No Farm Payrolls), 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) was surprisingly fast, at +263,000. The unemployment rate – this was not in the Fed’s plans either – contracted sharply to 3.5% of the active population, 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.
However, “a sufficiently rapid continuation of the downward trend in these job offers is one of the necessary conditions often cited by the Fed for the control of wages”, for the strategists of DORVAL AM, who note “however that, smoothed over the last few months, the increase in hourly wages seems to have stabilized around +4.5% annually. This is certainly more than the +3%-3.5% increase before Covid, but it is also significantly less than the +6% at the start of the year. These figures are not reassuring enough to lead the Fed to change its tune, but they do suggest that it may not be necessary to make monetary policy ultra restrictive with, for example , interest rates of 5% or more to obtain the expected normalization”, they temper.
On the values ​​front, Renault accelerated upwards (+4.91% to 30.68 euros), supported by Oddo BHF which raised its opinion of the manufacturer with the diamond from neutral to outperformance with a price target raised from 35 at 55 euros. TotalEnergies ended up 2.6%, Technip Energies 0.3% as Brent trades above $97 and WTI near $92 following OPEC+’s decision to slash production by 2 million barrels per day for the month of November. Eramet limited its gains to 0.6% the day after a heavy fall of 20%.
On the other side of the Atlantic, the main equity indices lost significant ground, such as the Dow Jones (-2.11% to 29,296 points) and especially the Nasdaq Composite (-3.80% to 10,652 points), particularly sensitive to monetary and bond issues. The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, depreciated by 2.80% to 3,639 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 $0.9730. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $91.20.
To be followed as a priority on the statistical agenda this Monday, the Sentix index of investor confidence in the Euro Zone at 10:30 am. We will recall the holiday nature of the day across the Atlantic (Columbus Day); Wall Street will nevertheless remain open, under the usual opening hours and listing conditions.
KEY GRAPHIC ELEMENTS
The protest reaction that began on September 30 has emptied its reservoir of energy, the harami of October 05 having been confirmed by a closing on Friday on the opening level of October 04. The consecutive “danger”, at this stage, is the opening under the gap of October 04, graphically isolating four sessions, subject to the preservation of the gap at the close on Monday.
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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