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The CAC 40 (+0.61% Friday to 7,491 points), a good distance from its session highs, should open in red territory on Monday, in the wake of Wall Street, disappointed by the temporary halt in discussions between the Democratic and Republican camps this weekend on raising the US public debt ceiling.
Negotiations in the US Congress whose operators are now feverishly awaiting the outcome. For Matt Miller, political economist at the discreet asset management juggernaut Capital Group: “This situation could lead to an unprecedented blockage, and in any case at least as serious as that of 2011.”
That year, Standard & Poor’s downgraded the United States’ rating from AAA (maximum rating) to AA+ (still in effect to this day), a decision motivated by fears linked to the federal government’s budget deficit, growing long-term debt burden and political wrangling over raising the debt ceiling. From this announcement, the American financial markets plunged, before recovering quickly.
“The lesson to be learned from 2011, but also from 2013 – when the federal administration again found itself at an impasse – is that while these events can destabilize the markets for several weeks, even for several months, past data shows they rarely have a prolonged impact on investors, explains Matt Miller. Provided of course that a reasonable solution is found”.
At the same time, investors followed the G7 in Japan, where it was discussed, no offense to Xi Jinping, geopolitical tensions in the China Sea, and the conflict in Ukraine.
On the value side, very few spectacular differences to report, regardless of the compartments of the rating. The video game publisher and developer Ubisoft contracted by 0.7% to 24.46 euros, heckled by UBS which downgraded its opinion to “sell” on the title of the video game publisher. In the mid-cap department, ESI Group (+3%) was supported, as on Thursday, by takeover speculation, the company having indicated that it was conducting preliminary discussions with a view to a potential sale.
On the other side of the Atlantic, the main equity indices ended a week with a positive balance sheet, with a session of decline, like the Dow Jones (-0.33% to 33,426 points) or the Nasdaq Composite (-0.24% to 12,657 points). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, contracted slightly, by 0.14% to 4,192 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 $1.0810. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $71.00.
To follow as a priority on the macroeconomic agenda this Monday, the consumer confidence index in the Euro Zone at 4:00 p.m.
KEY GRAPHIC ELEMENTS
Breaking the 7,316 / 7,320 points would accelerate clearances towards 7,235 points. Only a clear overshoot, with sectoral federation, of 7,585 would generate an additional leg up.
In the immediate future, a continuation of a balancing of buying and selling forces in a nervous atmosphere is expected. In the immediate term, the relative momentum of the remarkable moving averages remains concerning.
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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