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The CAC 40 index managed to post new historic highs at the close on Friday (7,577 points), affording itself the luxury of grabbing a few points at the very end of a week marked by consolidation. Two main “engines” pulled the entire market on Friday: Essilor Luxottica (+6.27%) and L’Oréal, which made exciting quarterly copies.
However, operators have had to deal with divergent messages regarding economic activity in Europe. If these indicators (PMI), in preliminary data for the month of April, exceeded expectations for services (56.6), they were clearly disappointing for industry (45.5), on the scale of the whole of Eurozone. The only German component, at 44 points, is a real disappointment. Remember that a score of less than 50 points means a contraction of the activity considered. The score of 45.5 mentioned above constitutes a base point of 35 months.
“The fall in manufacturing output in the eurozone is partly explained by social unrest in France, where companies have clearly suffered the repercussions of strikes organized to protest against the pension reform imposed by the government”, interprets Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, who supports, in a reassuring way: Fears about a re-emergence of the energy crisis, improving supply chains and hopes that inflation has now peaked have in fact given rise to more optimism among companies. inflation also raises hopes that the ECB will soon end its policy of raising interest rates.”
In the weeks to come, and in particular until the next FOMC in May, operators will have to measure the effects of many years of firm monetary policy on the American economy. “The loss of momentum in American activity is confirmed”, analyzes Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM. “The real estate recession persists (pessimism among builders, decline in building permits and sales of existing homes). Executive confidence is deteriorating, as are regional surveys in the industry. The “Beige Book” describes an activity sluggish, an easing of the labor market, a moderation in wage pressures and inflation. The leading indicator is sinking into recessionary territory.”
On the other side of the Atlantic, the main equity indices managed to close symbolically in the green, within very narrow margins like the Dow Jones (+0.07% to 33,808 points) or the Nasdaq Composite (+0.11% to 12,072 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, climbed 0.09% to 4,133 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 $1.0980. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $76.80.
To follow as a priority on the macroeconomic agenda this Monday, the IFO index of the business climate in Germany at 10:00 a.m.
KEY GRAPHIC ELEMENTS
After a “crazy” week (W15), marked by the tracing of a long white weekly candle, of which a good part of the body is made up of successive historical peaks, the time has come for the consolidation of the advance, even if the underlying bullish message remains intact, as shown by the reconquest of the 50-day moving average (in orange) by its 20-day counterpart (in dark blue). Just like the pursuit gaps visible in the hourly chart. In the immediate term, a continuation of a healthy flat consolidation phase is envisaged. An encouraging sign, the ability, while consolidating, of the index to end on the weekly highs in week 16.
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 7740.00 points would revive the tension in the purchase. While a break of 7234.00 points would relaunch the selling pressure.
The News Bulletin 247 board
Hourly data chart
Chart in daily data
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