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Affected by the figures for US inflation, which is not falling enough in the eyes of the market, the CAC 40 lost 0.49% to 7,361 points yesterday.
Hot spot of the statistical calendar today, the CPIs (consumer price indices), have just been published. If prices, excluding food and energy (data core) exceeded the target by increasing by 0.4% in April, the reassuring data comes from 4.9% inflation at an annualized rate, against 5.0%, in the broadest product base. Inflation thus stands out “at the lowest”, with the necessary quotation marks, since May 2021. What bring a certain relief, even though “the latest PCE figures (household consumer price indices), published two weeks ago on the rise and beyond the consensus, had not slowed down the markets”, notes Vincent BOY (IG France).
Enough to fuel, with the producer price indices tomorrow and consumer confidence on Friday, the Fed’s thinking. Will the construction of its monetary policy take the form of a long pause, before a downward inflection? Muzinich & Co strategists note, however, that “at the FOMC (Federal Open Market Committee) press conference, Jerome Powell took issue with the apparent market view that the Fed will cut rates in the second half of 2023, citing a base case scenario of slowly declining inflation and a still strong labor market, with rate cuts not justified ‘in this world’.”
On the value side, Casino Guichard lost an additional 5.95% (-31% since the start of the year), to 6.715 euros. The distribution group saw its credit rating lowered by two notches to CCC- by Standard and Poor’s, which is extremely concerned about the company’s financial situation. Alstom lost 2.41% to 23.08 euros. The railway equipment manufacturer saw its rating lowered by one notch by the rating agency Moody’s and now has almost no margin compared to its investment grade rating target. The company also postponed its profitability and cash generation targets for a year, citing the inflationary context.
Luxury continued to suffer from doubts about the quality of the Chinese economic recovery, like its representatives in the flagship index, L’Oréal (-1.30% to 417.2 euros), Kering ( -1.40% to 541.5 euros), or Hermès (-1.43% to 1,959 euros). The world’s second-largest economy is showing signs of weakness as China’s exports rose 8.5% year on year last month, down from March’s 14.8% growth, while imports fell 8.5% year-on-year. 7.9%, more than in March (-1.4%) and much more than the consensus of economists polled by Bloomberg (-0.2%).
Against the trend, Crédit Agricole has thrilled the financial community, after making an impeccable quarterly copy.
Wall Street ended in disarray after the inflation data, with the Dow Jones contracting 0.09% to 33,531 points and the Nasdaq Composite gaining 1.04% to 12,306 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, eroded 0.45% to 4,137 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 $1.0970. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $73.10.
To follow as a priority on the macroeconomic agenda this Thursday, the producer price index in the United States at 2:30 p.m. and, still across the Atlantic, the weekly registrations for unemployment benefits at the same time.
KEY GRAPHIC ELEMENTS
Beware of the probable commitment of the three-color flagship index in a shoulder, head and shoulders pattern above a graphic base materialized by the bullish gap of March 30, below 7,235 points. We will watch like the milk on the fire, the continuation if necessary of this route to identify work scenarios. The breakout of 7,316 points would accelerate the release towards the aforementioned level.
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 7585.00 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.
