(News Bulletin 247) – While the scale of the ECB’s rate hike did not come as a surprise (+50 bps yesterday following the Board of Governors), the tone of the discourse and the revision of economic forecasts, particularly in terms of inflation, threw a chill on the markets, causing the DAX and the CAC 40 to lose ground (-3.09% to 6,522 points), weighed down by growth stocks, luxury and technology. STMicroelectronics plunged 4.88% to 35.41 euros, Hermès by 5.01% to 1,499 euros, Kering by 5.57% to 495 euros, and Wordline by 6.77% to 38.14 euros.
The upward slope of the single currency’s rent should continue over the next few months. So swept away, the idea of a break in the ascent, for the powerful Frankfurt Institution, which, as Wilfrid Galand, Strategist Director at Montpensier Finance, underlines, “unlike its American counterpart, […] has the custody of a Monetary Union of sovereign countries and whose financial characteristics are more and more divergent.
“The ECB thus indicates that its main tool for steering monetary and financial conditions in the euro zone will change: the emphasis will be placed as of next year on withdrawals of liquidity via the significant reduction in the size of its balance sheet at the of 15 billion per month”, notes Etienne de Marsac, Head of Management at Sunny AM. “The “Quantitative Tightening” program is finally launched in the euro zone, and European financial markets are entering unknown territory…”
The ECB has revised its economic projections, particularly in terms of inflation, assuming a rate for the euro zone of 8.4% in 2022, 6.3% in 2023 then 3.4% in 2024 and finally 2.3% in 2025.
In terms of statistics, operators had to deal with major American macroeconomic indicators showing, on the whole, negative signals (retail sales, Philly Fed, Empire State Index), in a labor market whose signs of tension persist (weekly registrations for unemployment benefits).
On the other side of the Atlantic, the releases were also copious with the Dow Jones losing 2.25% to 33,202 points and the Nasdaq Composite by 3.23% to 10,810 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 2.49% to 3,895 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 $1.0650. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $76.60.
To be followed as a priority on the macroeconomic agenda this Friday, a battery of activity indicators in 1st estimates for the current month (PMI). The German component will be released at 09:30, the French a little earlier at 09:15.
KEY GRAPHIC ELEMENTS
The three-color index traced in one session the entire amplitude of the consolidation figure above 6,550 points, the integrity of which was threatened. Thursday’s close was very close to the session lows, and the power of the volumes gave credence to the option of a breakout, at the end of this threshold.
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 6740.00 points.
Hourly data chart
Chart in daily data
©2022 News Bulletin 247
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
