(News Bulletin 247) – The CAC 40 had a session in two distinct stages on Friday, under strong pressure before Wall Street came to the rescue. Investors latched onto a Wall Street Journal report that some members of the Federal Reserve would not be against the idea of slowing the pace of its monetary tightening from December before stopping the hikes in key rates at the beginning of next year. Also according to this article, the institution would be heading for a rate hike of 0.75 percentage points at its next meeting in early November.
Finally, the flagship Parisian index will have lost only 0.85% to 6,035 points, saving the symbolic threshold of 6,000 points.
In terms of statistics, the Eurostat consumer confidence index in the Euro Zone rose only marginally, to -28 points, still clearly in negative territory.
On the value side, securities traditionally considered defensive underwent significant releases on Friday, such as Argan (-2.76%), Pernod Ricard (-3.12%), Remy Cointreau (-3.39%), Essilor Luxottica (-3.46%), or L’Oreal (-5.80%).
On the other side of the Atlantic, the main equity indices have regained ground, such as the Dow Jones (+2.47% to 31,082 points) or the Nasdaq Composite (+2.31% to 10 859 dots). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 2.37% to 3,752 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 $0.9850. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $84.10.
To follow as a priority on the statistical agenda this Monday, a battery of PMI activity indicators, for industry as for services, on both sides of the Atlantic. The synthetic data, in first estimates for the current month, will be known at 10:00 a.m. for the Euro Zone.
KEY GRAPHIC ELEMENTS
Going back to Thursday 13/10, the “short squeeze” session, Thomas Giudici (Auris Gestion) summarizes the technical aspects perfectly: “following the disappointing inflation figures and the initial drop observed, many hedge funds wanted to cash in their gains on their short positions. The simultaneous redemption of these positions, coupled with the triggering of stops, got the better of the downward movement. This event reminds us that the current tension on the market as well as the weight of hedge funds and systematic positions can lead to violent movements when overall liquidity is low.
This corroborates the idea of very unstable ground, against a background of divergence between prices and volumes. For the time being, it is the 50-day moving average (in orange), with a marked downward bias, which acts as a technical barrier.
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 6142.00 points would revive the tension in the purchase. While a break of 5640.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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