CAC 40: Dealing with messages from central bankers

(News Bulletin 247) – The CAC 40 will have succeeded in gaining 3% over the whole of the past week, by offering itself the luxury of registering new historic highs (7,387 points), against a background of acceptance of persistence high inflation on both sides of the Atlantic, and digesting the messages sent by the Fed and the ECB. Recent data relating to prices, or inflation barometers (consumer prices, production prices, employment) have illustrated the tensions on the economic machine, in particular on the other side of the Atlantic. “Financial markets are adjusting to messages from central bankers on the risk of persistent inflation”, analyzes Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM, who argues: “Expectations on key rates are revised accordingly and 10-year sovereign yields are tending to around 3.9% in the United States, 2.5% in Germany and 2.9% in France.”

It is clear that it was the results of the major groups that enabled the CAC to stand out over the week. Ball, which continued on Friday with Air France-KLM, posted a 5.3% increase against the bad market trend, driven by excellent 2022 results, well above expectations. Conversely, GTT lost 6.2%, again despite good annual accounts. But the forecast for gross operating income (Ebitda) for 2023 somewhat disappoints market expectations. Same logic for Eutelsat (-9%) which published half-year results below analysts’ forecasts. Valneva for its part lost 9.1%, weighed down by disruptions in clinical trials evaluating its vaccine candidate to treat Lyme disease.

Across the Atlantic, major equity indices ended Friday’s session in mixed order, with the Dow Jones climbing 0.39% to 33,826 points, and the Nasdaq Composite dropping 0.58% to 11,787. points. The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, ended on a slightly negative note, however far from its session lows (-0.28% to 4,079 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 $1.0690. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around 77.00$.

To be followed as a priority on the macroeconomic agenda on Monday, the monthly report of the BuBa (Bank of Germany). Note that Wall Street will remain closed due to a holiday (Commemoration of the birth of George Washington).

KEY GRAPHIC ELEMENTS

In rising volumes if not particularly fed, the CAC 40 ended up significantly on Wednesday 02/15, offering itself the luxury of closing at a level very close to the high points of the session. The traced candle, formally in marubozu near perfect, coupled with an engulfing combination, reinforced the underlying bullish message. The next day in session, new historic records were beaten. A serene consolidation can take place.

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