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First of all, note that, because of our turn to summer time, Wall Street will open again, as usual, at 3:30 p.m. The traditional statistical appointments of the beginning of the afternoon therefore return to 2:30 p.m. and not 1:30 p.m., as was the case during this two-week interval.
Without resuming outspoken colors, the Parisian market started the week in positive territory (+0.90% on Monday for the CAC 40, at 7,078 points), in any volume, against a backdrop of relative relief on the solidity of the banking system. . In particular, the Paris market was supported by the purchase of “all deposits and loans” from Silicon Valley Bank (SVB), which went bankrupt in early March.
The reassuring messages from the American authorities, throughout the weekend, on the health and solidity of the banking system, will have made it possible to stop the bleeding.
“The Treasury, the Fed and the political powers want to be reassuring about the current banking crisis, but the data from the American Federal Reserve show strong tensions on the system”, notes Vincent BOY, market analyst IG France. “Indeed, after a year of balance sheet reduction by the Fed, leading to a fall of 650 billion, the balance sheet has again increased by nearly 400 billion in just two weeks. At this rate, the QT (quantitative tightening) started in March 2022, will be completely erased at the beginning of April.
However, the diminished fears have not been erased, and the Credit Suisse and Deutsche Bank cases, although fundamentally different from the setbacks of American regional banks, are there to remind us of this.
“While the stress on the banks has not subsided, central banks are currently facing a difficult dilemma: to ensure financial stability, in particular by providing emergency liquidity to banks, or to continue their fight against inflation, by tightening financial conditions, at the risk of aggravating the current situation”, for Thomas Giudici, head of bond management at Auris Gestion.
“Unlike Europe, the subject of the soundness of regional banks is more worrying, which prompted the American institution to adopt a much more cautious bias in its press release by using the conditional for its future rate hikes, the Fed considering that the current banking crisis is already acting in the tightening of financial conditions,” adds the manager in his weekly note.
The market will also have been driven by the automotive equipment sector, at high Beta, like Faurecia (+2.92% to 18.305 euros) or Plastic Omnium (+3.87% to 15.85 euros) . Manufacturers were also well oriented, Renault gaining 2.95% to 36.49 euros and Stellantis 2.02% to 16.23 euros.
In terms of statistics, the IFO index of the business climate in Germany emerged this morning up to 93.3, beyond expectations. This is its fifth consecutive increase. “This positive development was mainly driven by business projections; companies also rated their current business as somewhat better. Despite turbulence in some international banks, the German economy is stabilizing,” it read. in the press release accompanying the raw data.
On the other side of the Atlantic, the main equity indices closed in mixed order, like the Dow Jones, up 0.60% to 32,432 points and the Nasdaq Composite (-0.47% to 11,768 dots). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, ended on a note of near stability (+0.16% to 3,977 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 $1.0820. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $72.90.
To be followed in priority on the macroeconomic agenda this Tuesday, the American consumer confidence index (CB) and the manufacturing index of the Richmond Fed at 4:00 p.m.
KEY GRAPHIC ELEMENTS
Certainly the 7,000 symbolic points were “saved” in extremis closing Friday. But the red body of the candle, with its amplitude, combined with the power of the trading volumes, precipitated the now imminent crossing of two remarkable moving averages: at 20 and 50 days (in dark blue and orange respectively). The red body Monday 03/27, admittedly thin, contained in the body of the red candle of the previous session, relativizes the durability of the technical reaction in progress, just like the volumes observed, weak.
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 7225.00 points.
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
