CAC 40: The Fed lays the foundations for monetary normalization

(News Bulletin 247) – The Fed ended a meeting of the Monetary Policy Committee (FOMC) yesterday at 8:00 p.m. (French time, well after the close therefore). The consecutive press conference reassured Wall Street. This Thursday, it is the turn of the European Central Bank to pass on the grill. She completes a new Board of Governors.

The Fed has paved the way for normalization, paving the way a little more clearly. It plans to end the bond buyback program in March, and a three-quarter point increase in its rates, in three times, over the coming year.. And this with the aim of fighting against inflation that is no longer temporary. Associated with new economic projections, this strategic commitment of the Fed was not considered more “hawkish” than expected, and Wall Street will have appreciated …

The Dow Jones gained 1.08% to 35,927 points, and the Nasdaq Composite 2.15% to 15,565 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, rose 1.63% to 4,709 points.

This turn (not too tight) was anticipated. “Several former Fed members, such as William Dudley, Dennis Lockhart and more recently Narayana Kocherlakota, have published columns calling on the Fed to quickly tighten its monetary policy to bring inflation back on a more acceptable path,” noted Alexandre Baradez (IG France) before the outcome of the FOMC.

The CAC 40 nibbled 0.47% to 6,927 points, all the oscillations remaining included within the amplitude of the candle of the day before, the operators having remained awaiting the verdict of the Fed, without taking clear-cut initiatives. Growth stocks, mainly in the tech and luxury sectors, managed to do a little “Beta”, like STMicroelectronics (+ 2.21% to 42.63 euros), Dassault Systèmes (+2 , 25% to 52.71 euros), or Hermes (+ 2.53% to 1,599.50 euros).

In terms of statistics, disappointment to report on the front of American consumption yesterday. Retail sales (excluding automobiles) rose in November by only 0.3%, against a target of + 0.9% and especially a previous month at + 1.7%, according to the Census Bureau.

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 1,1300$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 71,80$.

To be kept on the agenda this Thursday, as a priority, a battery of PMI activity indicators in services and industry, in first estimates for the current month. Synthetic data will be released at 10:00 a.m. American side, to follow the manufacturing index Empire State and weekly registrations for unemployment benefits at 2:30 p.m. The industry report will be released at 3:15 p.m.

To follow the ECB’s monetary policy decision at 1:45 p.m. and the press conference at 2:30 p.m.

KEY GRAPHIC ELEMENTS

A sharp rise is expected on Wednesday in the wake of Wall Street. However, we did not come out of a volatile broadband phase. The resumption of a rally unconditional buyer has not been on the agenda since November 19. 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 therefore still to be anticipated. The form that consolidation will take will be instructive.

PREVISION

In view of the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.

This bullish scenario is valid as long as the CAC 40 index is quoting above the support at 6894.00 points.

Hourly data graph

Daily data graph

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