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Illustrating the nervousness of operators, pending concrete progress in the negotiations on raising the American public debt ceiling, the CAC 40 ended down 0.18% at 7,478 points, passing the entire Monday’s session within narrow margins.
“The deadline for Republicans and Democrats to agree is set for June 1, ie in 10 days, before a technical default by the United States. If the discussions continue, they remain tense by the very admission of the protagonists with even a weekend break.” notes Thomas Giudici, head of bond management at Auris Gestion.
“The main sticking point still remains around spending cuts. Republicans are still pushing to get them back to their 2022 level, a $130 billion drop, while increasing the defense budget. , Democrats want to extend the borrowing limit through 2025 by increasing tax revenue with higher taxation of wealthier households and businesses, a red line for Republicans.”
In terms of statistics, very little to eat yesterday. We should nevertheless mention the consumer confidence index in the Euro Zone, which is perfectly on target at -17. The agenda becomes more dense as of Tuesday, with in particular highly anticipated PMI activity indicators (see below).
On the values ​​side, Ubisoft resumed the upward path (+1.43% to 24.81 euros) after being heckled on Friday by a downgrading of UBS’s recommendation to “sell”. Air France-KLM (+2%) benefited from a positive cross-reading of the results of Ryanair which gained 1.3% in Dublin. The Irish airline recorded a jump in its results for its entire 2022-2023 financial year, with a profit of 1.43 billion euros, close to its all-time high. Sanofi ends down 1.3% while the pharmaceutical group presented Sunday positive results in the treatment of chronic obstructive pulmonary disease at an international congress.
On the other side of the Atlantic, the main equity indices ended Monday’s session in scattered order, like the Dow Jones (-0.42% to 33,286 points) or the Nasdaq Composite (+0 .50% at 12,720 points). The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, remained stable at 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 $72.30.
To be followed as a priority on the macroeconomic agenda this Tuesday, a battery of PMI activity indicators. Synthetic data for the entire Euro Zone, in first estimates for the current month, are expected at 10:00 am. The German industrial component is, in particular, expected to rise slightly to 44.9 points. Also follow the sales of new homes in the United States, as well as the manufacturing index of the Richmond Fed, 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 overrun, with sectoral federation, of 7,585 points 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. 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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