(News Bulletin 247) – The start of 2023 is decidedly unidirectional on the Paris market, its flagship index, the CAC 40, managing to grab 0.48% to 7,077 points, in relatively thick volumes, bringing its lead since January 1 to +9.32%.
Operators learned on Tuesday of the ZEW index of confidence in the German economy, which came out very sharply, returning to positive territory unexpectedly, at +16.9. A first since February 2022, “the month of the start of the Ukrainian war” notes the president of the ZEW, professor Achim Wambach.
The score shows “a noticeable improvement in the economic situation over the next six months. The more favorable situation on the energy markets and the brakes on energy prices imposed by the Confederation have contributed to this. In addition, export opportunities for the German economy are improving thanks to the lifting of Covid restrictions in China. As a result, profit expectations from export-oriented and energy-intensive sectors have improved significantly. ‘a further decline in the inflation rate leads to improved expectations for consumer-related sectors’.
On the other hand, the index Empire State (New York Fed Manufacturing Index) plunged to -32.9, completely missing expectations and weighing on the DJIA (see below). Finally, in China, the country’s growth reached 2.9% over one year in the fourth quarter and 3% on average over the whole of 2022, the lowest figure since 1976 if we exclude the year 2020 marked by the seal of the pandemic.
On the values side, Engie lost 5.5%. In a note published on Tuesday, Bank of America downgraded its opinion of the stock to “underperform” by two notches. UBS for its part indicated that it perceives risks on the group’s financial results from this year, in particular due to the drop in gas prices. In the smallcaps department, Abionyx gained 13.6% driven by good clinical results for its flagship molecule, CER-001.
Across the Atlantic, major equity indices ended Tuesday’s session in mixed order, with the Dow Jones contracting 1.14% to 33,910 points and the Nasdaq Composite managing to gain 0.14% at 11,095 points. The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, ended down very slightly by 0.20% at 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 $1.0810. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $81.40.
To be followed as a priority on the macroeconomic agenda this Wednesday, the consumer price indices in the Euro Zone at 11:00 a.m. and for the United States, producer prices and retail sales at 2:30 p.m., the NAHB market index US Residential at 4:00 p.m. and the Fed’s Beige Book at 8:00 p.m.
KEY GRAPHIC ELEMENTS
Since the start of the year, the flagship Parisian index has traced only one candle with a red body, proof of the ability, even in the event of a negative closing (05/01 for example), to mobilize buyers in during the same session. The paths of the short and long moving averages are now moving apart, strengthening the interpretation of buying sentiment. Naturally we will interpret the trough in volumes on Monday in the light of the absence of many operators (and initiatives) in the absence of benchmarks from Wall Street, which remained closed for a holiday.
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 quotes above the support at 6760.00 points.
Hourly data chart
Chart in daily data
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