(News Bulletin 247) – A legitimate consolidation movement is taking shape in Paris, against a backdrop of uncertainty about the shape of the Fed Funds curve for the months to come. While its rate of rise will be slower, the length of the neutral rate’s reach, and the value of the latter, are still the result of interpretation, while the macroeconomics is sending divergent signals (PCE and employment last week).
Yesterday, it was ISM Services, which came out well beyond expectations, at 56.5 points, which paradoxically tensed the trading rooms, especially across the Atlantic. This robustness of this part of the American economy comes to shower the hopes of a more accommodating Fed, after the announcement on Friday of job creations which exceeded the projections of economists. “The job market is nevertheless still resisting. If the tensions are, there too, a little less strong, the job market remains surprisingly solid”, notes Thomas Giudici (Auris Gestion).
On the securities side, several files were penalized by lowerings of recommendations on the part of analysts. Plastic Omnium lost ground (4.2%) as JPMorgan moved to “underweight” on the stock while Bouygues closed down 2.9%, weighed down by Bank of America which downgraded its advice to ” underperformance”. Beneteau ended the session sharply up 16.4% after updating its outlook for its 2022, 2023 and 2025 financial years.
On the other side of the Atlantic, the main equity indices ended in the red, like the Dow Jones (-1.40% to 33,947 points) and especially the Nasdaq Composite (-1.93% at 11,239 points), by nature very sensitive to variations in sovereign bond yields. The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, lost 1.79% to 3,998 points, symbolically dropping below the 4,000 point mark.
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 $1.0560. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $80.30.
To follow as a priority on the statistical agenda this Tuesday, the American trade balance at 2:30 p.m. Already published, the monthly change in German industrial orders (+0.8%) in October largely exceeded expectations.
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..
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 6898.00 points.
Hourly data chart
Chart in daily data
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