(News Bulletin 247) – Generalized caution on Monday for a CAC 40 which on the one hand was deprived of major macroeconomic benchmarks, and which on the other hand remained nervously awaiting monetary policy decisions (Fed tomorrow, and ECB on Thursday). CPIs, consumer price indices in the United States for November, will be the hot spot of the session.
“[Ces chiffres] will surely set the tone for the FOMC meeting”, warns Sébastien GRASSET, Member of the Executive Board – Director of Asset Management at AURIS Gestion. “If global inflation is expected to fall by 0.4% at an annual rate (from 7.7% at 7.3%), the fight is not yet won. Indeed, the ISM Services index came out well above expectations in November, proof of the dynamics in services, whose inflation component continues to rise (with a contribution of around 50% within the headline inflation). At the same time, producer prices also surprised, with smaller declines than expected. This week could consolidate the change observed in the Fed’s monetary policy. One thing is certain, however, the current degree of this inflection is not yet sufficient to speak of a true “dovish pivot”.
It is this whole essential question of the shape of the curve of Fed Funds which will focus the markets’ attention for this last part of the year: more flattened, the progression could be slower, but what about the “terminal” rate?
On the stock side, Sanofi lost 0.4% after announcing that it was abandoning the takeover of Irish biotech Horizons Limited, an operation that could have exceeded 20 billion dollars. Airbus gained 0.4% following information from Reuters reporting a potential mega-order from Air India for the European group as well as for its American competitor Boeing. This order would be for 400 single-aisle aircraft and at least 100 jumbo jets. The biggest increase in the CAC 40 was however signed by Dassault Systèmes, with an increase of 1.8%. The title may have been carried by Morgan Stanley, which in its outlook for digital services companies for 2023 confirmed its advice to “overweight” the title. Accor lost 3.8%, suffering an underperforming downgrade from Jefferies. L’Oréal for its part fell 1.5%, suffering from the same movement on the part of Royal Bank of Canada.
On the other side of the Atlantic, the main equity indices managed to regain a few points on Monday, before entering the most delicate part of the week, like the Dow Jones (+ 1.58% at 34,005 points) or the Nasdaq Composite (+1.26% to 11,143 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.43% to 3,990 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 $1.0560. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around 73.00$.
To be followed as a priority on the macroeconomic agenda this Tuesday, the ZEW index of confidence in the German economy at 11:00 a.m. and the CPI (or CPI for English speakers), i.e. the consumer price indices, one of the Headline inflation measures for the United States at 2:30 p.m. What provide additional essential food for thought for the Fed in the construction of its monetary policy.
KEY GRAPHIC ELEMENTS
The courses of the flagship Parisian index are now at the heart of a range between 6,550 points and 6,740 points, in which, until now, the beginnings of a chartist figure 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. Technically, there is no solid enough material support to oppose a consolidation towards 6,550 points. The week 49 candle also sends an unattractive message, which is not worth conforming to the look of the week 50 candle, a highly significant week because of the monetary appointments it contains.
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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