CAC 40: Tense before monetary verdicts

(News Bulletin 247) – Risk appetite is contracting, on both sides of the Atlantic, moreover, as the respective outcomes of the last monetary policy meetings of the year approach, tomorrow for the Fed and Thursday for the ECB.

If “the ECB should wait patiently to reduce its asset buybacks, before starting discussions on rate hikes” for Vincent Boy (IG France), the prospect of a change in tone from the Fed weighs heavily .

“The question of the number of rate hikes is at the heart of the debates. [Les opérateurs ] “now foresee three rate hikes next year, while maintaining those anticipated for 2023. The possible change in the Fed’s monetary policy trajectory has triggered a sharp increase in market volatility”, for Mabrouk Chetouane, director Research and Strategy of BFT Investment Managers. However, this number of expected increases may change rapidly.

It must be said that the context is complex, with variables that are difficult to limit and correlate with one another: propagation of new variants, their dangerousness, inflation, bottlenecks and supply problems.

The Fed has already announced that it will no longer describe this price hike as “transient”, and observers now expect the institution to “announce a faster reduction” in asset buybacks in the markets, and “perhaps to an allusion to the fact that the first key rate hike in the United States could come sooner than expected” advance Ipek Ozkardeskaya, Swissquote analyst The ECB will take over Thursday by releasing its own economic forecasts to the from the Board of Governors.

As a reminder published on Friday, in the broadest product base, prices increased more than expected in November (+ 0.8% monthly), against + 0.9% in September. In data corrected for volatile elements (food and energy), prices rose 0.5%, in line with expectations, according to the latest data from the US Bureau of Labor Statistics.

In the statistical chapter on Monday, very little to chew on. Note all the same the encouraging contraction of the Italian unemployment rate, which fell from 9.8% to 9.2% of the working population.

In terms of values, the aeronautics compartment is paying operators’ caution (-3% for Safran, -2.4% for Airbus), as are cyclical stocks (-3.8% for URW, -2.1% for Saint Gobain , -1.8% for Thales, etc.). Carrefour dominates the charts with a gain of 2.5%, ahead of Veolia, whose lead is much more modest (+ 0.9%).

On the other side of the Atlantic, the market mood was clearly refreshed on Monday / The Dow Jones started the week with a loss of 0.89% to 35,650 points and the Nasdaq Composite of 1.39% at 15,413 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.91% to 4,668 points. Note the rising volumes for all of these flagship indices.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to 1,1280$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 71,40$.

To be continued on the agenda this Tuesday, industrial production in the Euro Zone at 11:00 a.m. and the producer price index in the United States at 2:30 p.m.

KEY GRAPHIC ELEMENTS

Omicron will have had the effect of revealing the hypersensitivity of the Parisian market, in particular its “Growth” files (for which the valuation multiples are high), mainly in luxury goods and technology. Result: the resumption of a raThe unconditional buyer is no longer the order of the day. A continuation of broadband nervous oscillations should be considered. Band whose amplitude is now defined, between 6,650 and 7,185 points. Between these two bands, nervous and choppy oscillations are to be expected. The form that consolidation will take will be instructive. Negative opinion proposed this Tuesday, with filling in the session of the “crossing” gap.

PREVISION

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 quotes below the resistance at 7185.00 points.

Hourly data graph

Daily data graph

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