CAC 40: A fresh wind blows unpleasantly on the banking sector

(News Bulletin 247) – This article, in free access, is produced by the stock market analysis and strategy research team of News Bulletin 247. To not miss any opportunity, consult all the analyzes and discover our portfolios by accessing our Privileges area.

A small fresh wind was felt on Tuesday at the Paris Stock Exchange, whose flagship index, the CAC 40, fell by 0.56% to 7,531 points, in rising volumes, penalized in particular by the banking sector. A setback to be related to the very unattractive quarterly copy of the Spanish establishment Santander. If its net profit, of 2.6 billion euros, exceeded expectations, its activities in Brazil and Spain are somewhat worrying investors. Jefferies notes that deposits in Spain fell 6% in the quarter, compared to the last three months of 2022, while its profit in Brazil disappointed expectations, which “could raise questions”.

In Paris, BNP-Paribas lost 2.38% to 57.73 euros, and Societe Generale 3.25% to 21.59 euros. Beyond the microeconomics, traders remained nervous about the ability of the US and European economies to hold their ground after years of tough monetary policy, and even as the end of the tunnel is glimpsed. Emblematic Value files fell significantly, such as Eramet (-3.27%), Faurecia (-2.94%) or Air France (-2.95%).

“While economies are nonetheless slowing, this is forcing central bankers to play a tightrope and divergences among members, both in the United States and in the eurozone, are increasingly marked,” notes Thomas Giudici, head of bond management at Auris Gestion. “However, as Jerome Powell has repeatedly reminded us, central bankers prefer to err by increasing too much, at the risk of slowing the economy more abruptly, than stopping monetary tightening prematurely.”

Verdict for a break, or a last turn of the screw, next month (03/05), at the end of the FOMC. By then we will have additional benchmarks on inflation and employment.

In terms of statistics on Tuesday, the Richmond Fed’s manufacturing index sank into red territory, at -10, even more than the consensus had predicted. And above all, the sacrosanct index of consumer confidence (Conference Board) fell back to 101.3, missing expectations.

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 $1,1050. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $78.20.

To be followed as a priority on the macroeconomic agenda this Wednesday, durable goods orders in the United States at 2:30 p.m. (Paris time).

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. In the immediate term, however, a short reflux towards the short moving averages will be an opportunity to test the camp’s motivation Buyer.

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.

Hourly data chart

Chart in daily data