(News Bulletin 247) – The technical, graphic and chart situation betrays a form of nervous hesitation at the top of the rally as major monetary maturities approach next week. If a 50 basis point rise in Fed Funds is almost guaranteed for the last FOMC of the year, it is the shape of the rate trajectory in 2023 (namely its degree of flattening) and above all the estimated value of the “terminal” rate which focus the attention of trading rooms.
Yesterday in terms of statistics, weekly registrations for unemployment benefits, for week 48, amounted to 230,000, in line with expectations, confirming a significant degree of tension on the job market. As a reminder last Friday, the publication of the NFP corroborated these tensions: if the unemployment rate stood at a stable level, at 3.7% of the active population, the number of job creations in the private sector (excluding agriculture) remained high, at 263,000 new units, well above target; and above all, the dynamics of wages (+0.6% on a monthly basis) showed no signs of easing.
“This continuation of US wage increases at a high level should further worry the market because it justifies the Fed’s desire to continue to raise rates and above all to keep them at a high level as long as the job market does not return to a more normal regime”, for Vincent Manuel, Chief Investment Officer Indosuez Wealth Management: “This could lead to a return to volatility around the Fed meeting and early in the year. The challenge is not the magnitude of the December rate hike (50 bp hike almost a given) but rather having a slightly higher terminal rate and a longer high rate plateau than expected.
The ECB ends its next Board of Governors on 15/12. The Fed for its part completes its next Monetary Policy Committee (FOMC) on 14 December.
For Erick Muller, Director of Products and Investment Strategy at Muzinich & Co, “the FOMC members’ projections (the DOTS) will send a clear message about the intentions to keep rates high for a long time, so as not to validating market expectations of a “pivot” which may seem premature for the Fed. This should result in a median projection up towards 5% for 2023 but also much more concentrated projections between 4% and 5% for 2024 than ‘last September, where the 2024 projections were very scattered.”
At values ​​​​in Paris, Derichebourg gained 3.92% to 5.43 euros, after publishing results for its entire 2021-2022 financial year ending in September up sharply, driven by the integration of Ecore. Elior for its part took over 4.1%. Carmat fell 17.6%. The artificial heart specialist carried out a capital increase of around 31 million euros to finance its development, at a price of 10.5 euros per share, i.e. a discount of 20% compared to the closing price on Wednesday .
On the other side of the Atlantic, the main equity indices managed to grab a few points on Thursday, like the Dow Jones (+0.55% to 33,781 points) or the Nasdaq Composite (+1.13 % at 11,082 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.75% to 3,963 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 $1.0580. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $73.70.
To follow as a priority on the statistical agenda this Friday, for the United States, the producer price indices at 2:30 p.m., business inventories at 4:00 p.m., as well as preliminary data from the consumer confidence index (U -Mich) at 4:00 p.m. as well.
KEY GRAPHIC ELEMENTS
The prices of the flagship Parisian index are now at the top of a range between 6,550 points and 6,740 points, in which, until now, the beginnings of a chartist pattern were emerging. This would only continue in the event of a decline in the lateral channel. Conversely, a clear overshoot, on an uncontested gap for example, would pave the way for a rapid achievement of 6,900 points. In the immediate future, a new breath in prices below 6,740 points is the preferred scenario, which was confirmed by the content of the NFP report on Friday. Technically, there is no solid enough material support to oppose a consolidation towards 6,550 points.
Therefore, the pattern of the weekly candle, coupled with the magnitude of losses over the week, will be watched closely.
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 6740.00 points would revive the tension in the purchase. While a break of 6550.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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