(News Bulletin 247) – The CAC 40 will have exceeded the symbolic threshold of 7,000 points (incursion during the session), Thursday, with the support of US inflation figures in December, which confirmed a marked slowdown in the rise in price.
The consumer price index, for the widest product base, came out perfectly within the target, at +6.5% on an annual basis. What bring a certain relief without blowing the cork of the bottle of champagne.
The confirmation is that of a marked slowdown in the rise in prices on the other side of the Atlantic, even if the road to a landing in inflation will still be long. The fight, through a firm monetary policy, will clearly have to continue.
“The market remains confident that the Fed will not raise rates as much as it indicated in the December projections. Fewer rate hikes create favorable market dynamics for risk (equities, credit and duration included) against a drop in the dollar”, says Axel Botte, International Strategist at OSTRUM AM. “However, it cannot be excluded that the reopening of China will induce an early rebound in oil prices. The improvement in the outlook is already visible in industrial metal prices. In this case, market expectations would reconverge towards the levels indicated by the FOMC…”, warns the strategist.
The US central bank will hold its next monetary policy meeting in February. The publication of US inflation in line with expectations strengthened market expectations of an increase limited to 25 basis points (0.25 percentage points). According to the CME Group’s FedWatch tool, 94% of investors (compared to around 80% before the inflation publication) anticipate a movement of this magnitude.
In terms of values, Atos rose 6.8% the day after a 6.2% increase, while Teleperformance rose by 4%, followed by Air France-KLM (+3.3%). Ubisoft, for its part, plunged 14% after issuing a resounding profit warning and announcing cost-cutting measures, following disappointing game sales this winter.
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 $1.0830. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around 78.00$.
To follow as a priority on the macroeconomic agenda this Friday, the American consumer confidence index (U-Mich, preliminary data), at 4:00 p.m.
KEY GRAPHIC ELEMENTS
This ability to close exactly on the weekly highs is interesting at this stage (S1), and must be confirmed by the volumes and the sector federation to consider a more lasting grip on the buying side. In the absence of such confirmations, entry into a highly volatile consolidation pattern, with an uncertain exit direction, is the preferred option. In the immediate future in any case, no divergence between price and oscillatory RSI is to be noted. The challenge this Friday is once again the validation of a close close to the weekly highs (S2).
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is above the support at 6694.00 points.
Hourly data chart
Chart in daily data
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