(News Bulletin 247) – The CAC 40 started the week on a note of perfect neutrality (+0.00% to 6,416 points) in a market that is advancing on tiptoe, upset by the still very belligerent tone of the main central banks , seeking confirmation of a reopening of the Chinese economy, and awaiting the results of the midterm elections in the United States.
All the seats in the House of Representatives will be renewed and more than a third of those in the Senate. “According to the latest polls, the Republicans are the big favorites to regain the majority in the House of Representatives. The race is tighter in the Senate where the Democrats have a chance to maintain a narrow majority”, note the economists of Oddo BHF. “The loss of just one of the two chambers of Congress would be enough to rekindle the arguments between the two parties over the budget and the federal debt ceiling,” they warn.
It must also be said that the financial community remains in the dark on the issue of the Fed’s “neutral rate”, in the midst of digesting the latest FOMC. “Once the terminal level has been reached, the Fed could decide to maintain it for some time to guarantee a return of inflation towards the 2% target. From there to anticipate that the key rates will not be lowered in 2023… there’s only one step!” analyzes Thomas Giudici, co-head of bond management at AURIS Gestion.
“Investors are therefore no further ahead after this new Fed meeting. If, as expected, the pace of rate hikes is set to slow, the terminal rate will depend on future data and the duration of the restrictive policy is the new unknown in the equation for next year.”
In terms of statistics, the Sentix index of investor confidence in the Euro Zone, at -30.9, although still in negative territory, made a good comeback. The firm specializing in behavioral finance provided the following reading keys: “The global index rose by 7.4 points to -30.9, which is still not a signal of a trend reversal. But the rise in Situation and anticipation values show how sensitive investors are reacting in their economic expectations to signals from the energy market, because this is the cause of the promising changes.October showed higher temperatures than usual and that means gas storage facilities in Germany, for example, are full to the brim, more than expected for November, spot market gas prices have crashed and fears of a catastrophic gas shortage are fading.”
On the values side, Renault pulled up the CAC 40, rising 3.77% to 31.665 euros on the eve of its day dedicated to investors. The group was carried by press information surrounding its potential future entity dedicated to the design and marketing of electric vehicles. Still on the automotive side, the equipment manufacturer Faurecia won 4.2%, benefiting from cheap buyouts. Axa for its part took 2.2%, supported by an increase in recommendation to buy from the Swiss bank UBS.
On the other side of the Atlantic, the main equity indices nibbled away a few points on Monday, like the Dow Jones (+1.31% to 32,827 points) or the Nasdaq Composite (+0.85% to 10,564 dots). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.96% to 3,8036 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 $0.9990. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $91.50.
To follow as a priority on the statistical agenda this Tuesday, the trade balance in France at 8:45 a.m., and across the Atlantic, the NFIB index of small businesses at 12:00 p.m.
KEY GRAPHIC ELEMENTS
After a gap of shortness of breath (01/11), 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, then Thursday with a bearish gap. However, the opening in island reversal on Friday and the gains made during the session itself, only confirmed the nervousness and the contrarian nature of the short-term market. Friday’s session is therefore not predictive. Overall, the index is skating on resistance levels.
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 6488.00 points.
Hourly data chart
Chart in daily data
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