CAC 40: Even the Bank of Japan gets involved

(News Bulletin 247) – After the Fed and the ECB last week, which surprised with their particularly firm tone, it is the Bank of Japan’s turn to drive home the point by announcing – and this is historic – the beginning of a shift towards less monetary flexibility… The BoJ decided on Tuesday to ease the control of yields on Japanese public debt. The institution will now tolerate a variation in 10-year Japanese debt yields of between +0.5% and -0.5%, i.e. double before, compared to its target rate of 0%. Enough to keep the markets cool as Christmas approaches, and to bury the hopes of a rally a little more. The CAC 40 contracted by 0.35% to 6,450 points, after having tested in session an intermediate support towards 6,390 points.

As a reminder, “the FED but also the ECB and the Bank of England clearly reminded investors of reality during their monetary policy meeting held last week”, observes Sébastien GRASSET (Auris Gestion): “if the pace and the extent of key rate increases will be, as expected, less (50 bps increase for the three central banks at their last meeting instead of the previous 75 bps), the fight against inflation is far from over and the key rates will continue to be raised with certainly a maintenance at a high level for a longer time than bought by the market.

A message hawkishwhich put investors “in their place”, for M Boy (IG France), and which caused the market to revise the shape of the rate increase curve, and the estimate of terminal rates.

Not much to eat yesterday in terms of statistics: housing starts and building permits in the United States for November did not send a clear message, while the consumer confidence index in the Euro Zone did not stray one iota from his target.

On the values ​​side, Engie fell 3.30% to 13.494 euros, after announcing that Belgium had asked it to increase its past provisions by 3.3 billion euros for the cost of dismantling the nuclear fleet across Quiévrain. On the other side of the spectrum, Elior appreciated by 3.9% after announcing a project to acquire the multiservices branch of Derichebourg, which for its part fell by 1.5%. This acquisition will be carried out entirely by exchange of shares, and will enable Derichebourg to rise to more than 48% of the capital of Elior.

On the other side of the Atlantic, the main equity indices symbolically managed to close in green territory, after spending most of Tuesday’s session in the red. The Dow Jones climbed 0.28% to 32,849 points, and the Nasdaq Composite 0.01% to 10,547 points. The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, nibbling 0.10% to 3,821 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 $1.0620. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $76.30.

To follow as a priority on the macroeconomic agenda this Wednesday, THE big event to check off, namely the publication of the consumer confidence index (Conference Board) at 4:00 p.m., which will make it possible to more accurately measure the risks of entry. world’s largest economy in recession.

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. The close on Thursday 15/12 was very close to the lows of the session, and the power of the volumes came to lend credence to the option of a break, at the end of this threshold. First attempt on Friday, with validation by the volumes. If the sectoral federation is not yet there, the technical signal sent is clearly negative.

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 6550.00 points.

Hourly data chart

Chart in daily data

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