(News Bulletin 247) – New very “sporty” session Friday on the Parisian market, with significant differences between high points and low points, and in the end a loss of 1.12% to 6,926 points, degrading the weekly candle to the outcome of the last monetary policy meetings of the year. This Monday, the pre-opening worries, after the withdrawal of Tokyo, against a background of concern about the spread of the Omicron variant of the Covid-19 coronavirus. In the Netherlands, new confinement has been decreed, and in Denmark, new restrictions, in the form of gauges in restaurants and shops, have been restored.
In the monetary chapter last week, it was therefore the turn of the ECB, after the Fed on Wednesday, to pass on the grill, by completing a Board of Governors. The monetary institution headed by Christine Lagarde indicated that it was keeping its key rates unchanged while announcing a gradual reduction in the pace of asset repurchases: net purchases of debt as part of its emergency purchase program against the pandemic (PEPP), with 1.850 billion euros, will be further reduced in the first quarter of 2022 and will expire as planned at the end of March.
John Plassard (Mirabaud) felt “a” slight improvement “in terms of” hawkishness “with a reduction (however expected) of the PEPP. However if the European Central Bank continues to count on transitory inflation (mainly driven by energy) , the question arises as to whether it is not too “timid” in terms of inflation forecasts, still counting on a slight increase (below its target) over the next 3 years. “
As a reminder, the Fed paved the way for monetary normalization, by laying out the path a little more clearly. It plans to stop 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 the new economic projections, this strategic commitment of the Fed was not considered more “hawkish” than expected. It must be said that this turn (not too tight) was anticipated.
While the less accommodating bias adopted by the world’s main central banks (we can even say downright more restrictive when it comes to the US Federal Reserve, which announced three rate hikes coming next year and as many in 2023 ) was ultimately taken on the safe side by investors, considering that giving up the fight against accelerating inflation would be the worst monetary policy mistake, disappointing economic data from Germany cooled the atmosphere in the morning on European markets. In particular the IFO business climate index in Germany. The business climate index in the Eurozone’s largest economy fell from 96.6 points in October to 94.7 points. “Companies were less satisfied with their current situation and expectations have become more pessimistic. Supply bottlenecks and the fourth wave of the coronavirus challenge German companies,” the publication read. IFO.
On the value side, Value files (Valeo, Société Générale), as well as growth files (Soitec, Hermes), were under pressure. The strongest decline is to be put at the rate of Ipsen (-8.05% to 85.86 euros), which announced the conclusion of a partnership with Genfit (+ 40.79% to 4.218 euros). The Lille-based biotech grants the pharmaceutical group the rights to its flagship molecule elafibranor, an experimental treatment for primary biliary cholangitis. Find all the details here.
On the other side of the Atlantic, all the flagship indices of the rating closed in the red, a little more lively on the files, however. Value, the rotation of value styles continuing nervously. The Dow Jones lost 1.48% to 35,365 points, while the Nasdaq Composite, with strong technological “coloring”, symbolically contracted (-0.07% to 15,169 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 1.03% to 4,620 points.
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 1,1250$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 68,20$.
To be kept on the agenda this Monday, to follow as a priority the index of leading indicators (Conference Board) in the United States at 4:00 p.m.
KEY GRAPHIC ELEMENTS
We did not come out of a volatile broadband phase. The resumption of an unconditional buyer’s rally 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 expected. The form that consolidation will take will be instructive. In the immediate future, an opening into a very wide bearish gap is to be expected.
PREVISION
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 quotes below the resistance at 7185.00 points.
Hourly data graph
Daily data graph
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Source: Tradingsat
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