(News Bulletin 247) – After tracing a marubozu-type candle on Friday, coupled with a bearish engulfing combination, a harami came to further weaken the recent history of candles on the CAC 40, risk appetite being compressed by the prospects of maintaining, over the whole of 2023, a firm monetary policy, in particular on the part of the Fed. Moreover, the value of the Fed Funds terminal rates is not yet clearly anticipated. In question a series of economic statistics published in the second part of last week. PCE (personal consumption expenditures), the Fed’s favorite measure in its assessment of inflation, came out above the target on Friday (+0.6% month-on-month versus +0.4%). Figures which come together with new signs of tension on employment (weekly registrations for unemployment benefits under 200,000 on Thursday) and consumption (U-Mich and household spending on Friday).
“These releases echo the Fed’s latest minutes, released last week, which revealed that several FOMC members were concerned about the recent rate cut and easing monetary conditions as inflation remained, according to them, still high”, analyzes Thomas Giudici, head of bond management at Auris Gestion. “A pause in the rise in key rates does not seem to be on the agenda either, while some members were even campaigning for a 50 bps increase at the last meeting. These elements confirm, in our opinion, that key rates are set to stay high for longer than the market is still anticipating even though Fed terminal rate expectations have been revised upwards by 25 bps over the week. One More Time…”
Note in terms of statistics on Monday, the severe decline in durable goods orders across the Atlantic, by 4.5% in January at an annualized rate. A figure heavily penalized by the only elements of transport equipment.
On the values ​​side, Axa rose 3.40% to 29.38 euros after launching its share buyback program for a maximum amount of 1.1 billion euros, as announced on the sidelines of its annual results last Thursday. . Michelin for its part, rose 2.74% to 30.205 euros supported by an increase in advice to purchase by the bank Goldman Sachs. Excluding the CAC 40, Eramet rebounded 7.8%, supported by Oddo BHF which raised its target to 143 euros while confirming its advice to “outperform”.
On the other side of the Atlantic, the main equity indices managed to grab a few points, while closing at a distance from their respective session highs, like the Dow Jones (+0.22% to 32 889 points) and the Nasdaq Composite (+0.63% to 11,466 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, eroded 0.32% to 3,982 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 $1.0550. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $75.80.
To be followed as a priority on the macroeconomic agenda this
KEY GRAPHIC ELEMENTS
The bearish engulfing pattern in powerful volumes and harami in much more discreet volumes, in the upper part of movement of momentum bullish, releases short-term downside potential, a potential that would only gain momentum if the 50-day moving average (in orange) breaks with its 20-day counterpart (in dark blue).
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 7422.00 points.
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