(News Bulletin 247) – Red should dominate this Thursday on the CAC 40, after a Fed Monetary Policy Committee which yesterday sent a message of firmness. The flagship index of the Parisian place had already lost 0.81% to 6,276 points, before the verdict of the institution led by J. Powell. The latter clearly dampened the hopes of a break, at the turn of the year, in the pace of progress of Fed Funds, this option being considered too “premature”. Moreover, the warning was clear on the prospects of reaching the neutral “rate”. The objective of precise quantification of the latter is still delicate.
This neutral (pivotal) rate is the cost of money beyond which the Fed acts as a braking force preventing the economy from overheating.
Unsurprisingly, the Fed raised its Fed Funds from 75 bps to 4.00%.
In terms of statistics, note the very sharp drop (45.1) in the German manufacturing PMI for the month of October in final data, far from the first estimates (45.7). In addition, the survey of the private firm in human resources ADP estimated at 239,000 the number of new job creations in the private sector (excluding agriculture), well beyond the consensus. A taste, before the NFP report on Friday, which confirms the persistent tensions on the American job market. Earlier in the week, new job openings (Job Openings and Labor Turnover Survey) came in at 10.720 million, beating expectations for September.
Side values, red lantern of the CAC 40, L’Oréal lost 3%, penalized by the forecasts below expectations issued by its competitor Estee Lauder. The American cosmetics giant anticipates a decline of 17 to 19% in sales in the second quarter and 6 to 8% for the full year. Sodexo, for its part, dropped 2% from the market, taking its profits on the value while the group delivered medium-term objectives described as ambitious by financial analysts. Elior, for its part, plunged 11.6%. Imerys fell 6.7% after reporting a further contraction in demand on the release of its nine-month results.
On the other side of the Atlantic, the firm tone of the Fed will have caused significant releases, especially on growth files, which explains the difference between the Dow Jones (-1.55% to 32,147 points ) and the Nasdaq Composite (-3.36% to 10,524 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 2.50% to 3,759 points.
Note that the American East Coast will switch to winter time overnight from Saturday to next Sunday. In the meantime, Wall Street will open at 2:30 p.m. (Paris time) and not 3:30 p.m., therefore.
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 $0.9800. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $89.30.
To be followed as a priority on the statistical agenda this Thursday, the unemployment rate in the Euro Zone at 11:00 a.m., the Bank of England’s monetary policy decision at 1:00 p.m., and across the Atlantic, weekly registrations for unemployment benefits at 1:30 p.m., as well than the ISM services index in final data for October at 3:00 p.m.
KEY GRAPHIC ELEMENTS
The flagship Parisian equity index continues to form a wide wedge, with an exit from the bottom (not yet in the news) would rhyme with a resumption of the bearish current in significant volatility. The good performance at this stage of stocks with high current beta, combined with trading volumes, leaves the field open to a short period of balance of forces present. Two scenarios are now considered for the very short term, once the precarious balance is broken: the entry into a consolidation pennant, or the formation of a new corrective leg.
In the immediate future, after a shortness of breath gap, the barometer traced on Tuesday November 1st a doji with a very pronounced high shadow, uninviting. The confirmation was clear on Wednesday with a bearish engulfing combination in slightly higher volumes.
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 6390.00 points.
Hourly data chart
Chart in daily data
©2022 News Bulletin 247
I am Janice Wiggins, and I am an author at News Bulletin 247, and I mostly cover economy news. I have a lot of experience in this field, and I know how to get the information that people need. I am a very reliable source, and I always make sure that my readers can trust me.
