CAC 40: After the Minutes and employment, US inflation on the grill

(News Bulletin 247) – The atmosphere remained cool on the Parisian market on Friday (-0.42% for the CAC 40 at 7,219 points), the day after a decline of 1.72% under the effect of the very offensive Fed Minutes. In the end and over the whole of this first week of the year, the flagship index still shows a gain of 0.93%.

The markets were surprised by the transcription of the then tense discussions around the schedule for reducing the balance sheet, with the publication of the Minutes on Wednesday evening. Bastien Drut, Head of Thematic Macro Strategy at CPR AM, summarizes: “During the FOMC in December, the Fed decided to accelerate” tapering “, that is to say to reduce its purchases a little more than expected. net of securities (Treasury securities and MBS), with an end of net purchases scheduled for mid-March 2022. The next question about the Fed’s balance sheet was to know if the size of the balance sheet would remain stable for some time or if it While Jerome Powell had indicated that discussions were underway on the subject, the FOMC minutes from December indicate that the reduction in the balance sheet should actually happen fairly quickly in 2022: it is mentioned there dozens of times! “

For Vincent Boy, IG France market analyst, “this rapid change in discourse comes as inflation figures continue to climb rapidly. The data to be released on Wednesday with the consumer price indexes (CPI) could make A further acceleration in the rise in prices in the United States emerges. The annual CPI for December is expected at 7.0%, after 6.8% in November and this would represent the highest level since January 1982. “

In terms of statistics, inflation figures in the Eurozone have risen above expectations, at + 2.6% in very first estimates for December, at an annualized rate, excluding food, energy, alcohol and tobacco (volatile elements) . A price increase that reaches the symbolic threshold of 5% if we include these elements in the basket …

Statistical high point on Friday, the private sector (excluding agriculture) created in December a little less than 200,000 jobs, far, very far from expectations. On the other hand, the unemployment rate for its part continues to decline, falling below the 4% mark of the working population. On private employment, the NFP highlights the continuing upward trend in leisure and hospitality, professional and business services, manufacturing, construction, transport and warehouses. logistics. The question now is how the market will interpret it in terms of tensions on the job market. Tensions that were on the agenda of the Minutes published earlier in the week, precisely.

In terms of values, growth files such as Dassault Systèmes (-1.79% to 47.815 euros) or Hermès (-3.82% to 1,447 points) fully participated in the decline, as did files with a defensive reputation, such as Pernod Ricard (-2.35% to 203.50 euros), or EssilorLuxottica (-3.05% to 177.16 euros).

On the other side of the Atlantic, the main equity indices ended in negative territory Friday’s session, symbolically for the Dow Jones thanks to banking (-0.01% to 36,231 points), more significantly for the Nasdaq Composite (-0.96% to 14,935 points), in line with a complicated week. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted 0.41% to 4,677 points.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to 1,1330$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 79,00$.

To be followed on the agenda this Monday, as a priority, the Sentix index of confidence of operators in the Euro Zone at 10:30 am and the unemployment rate in the Euro Zone at 11:00 am, expected to drop slightly to 7.2% of the working population.

KEY GRAPHIC ELEMENTS

the trend is not threatened at this stage, but it is clear that the losses on Wall Street last week had repercussions in Paris, in the form of one-off and targeted profits in Paris, profit-taking whose magnitude must be considered in the light of initial progress, case by case. We still remain well above a bullish slant and the 100-day moving average (in orange), benchmarks which tend to gradually merge, and which will therefore gain in technical significance.

PREVISION

In view of the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.

This bullish scenario is valid as long as the CAC 40 index is quoting above the support at 7000.00 points.

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