CAC 40: The end of recess?

(News Bulletin 247) – Nervousness about firm price levels: this will have been the qualification of the oscillations on the CAC last week, against a backdrop of market acceptance of the pursuit of a firm and offensive monetary policy on the part of and either side of the Atlantic. The flagship Parisian index, expected to be stable on Monday, lost 0.82% on Friday to 7,129 points.

“Central bankers’ insistence on the need for further tightening to curb inflation is undermining market optimism”, sums up Central bankers’ insistence on the need for further tightening to curb inflation is undermining optimism markets”, summarizes Jeanne Asseraf-Bitton, Head of Research and Strategy of BFT IM. The strategist supports: “Jérôme Powell reaffirms that disinflation has started but that the process will take time. Other members of the Fed underline that the fight against inflation will be long.” In addition, Ms Asseraf-Bitton noted “In the euro zone, a slow decline in inflation expectations among economic players: according to the ECB survey, consumers anticipate inflation at 6.6% in one year and 4.6% in 3 years.”

Central bankers overwhelmingly reaffirm that Fed and ECB monetary tightening is not over. last week, when Lagarde and Powell had seemed less harsh,” said Xavier Chapard of La Banque Postale Asset Management.

In terms of statistics, the preliminary data for the U-Mich consumer confidence index beat expectations by rising to 66.4 points.

On the values ​​side, L’Oréal limited its decline to 0.8% after publishing an operating margin slightly below expectations in 2022, but its activity remained buoyant in the fourth quarter. The stock market operator Euronext finished in the green (+1.4%). Its results broke records for 2022 and the company raised its target for synergies from the takeover of the Milan Stock Exchange. Excluding results, Orpea continued its ups and downs on the stock market. The title of the operator of retirement homes soared by 50%, the day after a rise of 20%. He had lost almost 18% on Monday. TotalEnergies resumed 2.6%, the biggest increase in the CAC 40, while the price of black gold rose with the announcement that Russia was going to reduce its crude oil production in March by 500,000 barrels per day.

On the other side of the Atlantic, the main equity indices ended Friday’s session in scattered order, like the Dow Jones (-0.50% to 33,869 points) and the Nasdaq Composite (-0 .61% at 11,718 points). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, remained in the green within narrow margins (+0.22% to 4,090 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 $1.0690. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $78.80.

To be followed as a priority on the macroeconomic agenda on Monday, the Eurogroup meeting.

KEY GRAPHIC ELEMENTS

Despite the alert that sounded yesterday, the index “holds” for the time being, above the symbolic 7,000 points, which serves as a basis for intermediate technical support. Above this symbolic threshold, a consolidation can take place without jeopardizing the short-term bullish bias. Below, another serious safeguard is that of the 50-day moving average (in orange), bullish since the beginning of November 2022.

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 7422.00 points would revive the tension in the purchase. While a break of 7000.00 points would relaunch the selling pressure.

Hourly data chart

Chart in daily data