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Penalized by the automotive, banking and luxury sectors, the latter sector being particularly sensitive to the slowdown in the Chinese economy, the CAC 40 experienced another session of decline (-1.54% on Tuesday), carrying its weekly loss, now over 3%. The toxic suspense surrounding the raising of the American public debt ceiling will have contributed to the bad atmosphere. We learn, however, that the agreement in principle found between J Biden and McCarthy was voted in the House of Representatives, by a comfortable majority, auguring a vote of formality in the Senate.
In the immediate future, investors will focus on employment figures (JOLTS, ADP, jobless claims and NFP) for this second part of the week. The opportunity to gauge the persistence of tensions on private employment, to mechanically anticipate the rise in wages, and its consequences on the next FOMC this summer.
The state of health of the Chinese economy revives fears of a more global slowdown and relegates to the background the lull in prices in several countries of the euro zone, before the official publication Thursday of inflation figures in the area. In France, consumer price inflation slowed to 5.1% year on year in May, after 5.9% in April, according to INSEE data. On Tuesday, Italian figures also showed a slowdown in price growth to 7.6% year on year in May from 8.2% the previous month, as did in Spain, where inflation slowed in May to 3.2 % over one year.
On the stock side of the flagship index, BNP-Paribas lost 2.32%, Hermès 2.64%, LVMH 2.64%, Kering 2.91%, Société Générale 3.05%, Michelin 3.17%, and Renault 4.31%. Among the survivors of the day, we can mention Capgemini which finished at the top of the CAC 40 thanks to a gain of 6.8%. The group benefits from several good news, namely the announcement of winning two contracts in Catalonia and above all the extension of its long-standing strategic partnership in data analysis and artificial intelligence with Google Cloud.
On the other side of the Atlantic, the main equity indices closed Wednesday’s session in the red, like the Dow Jones (-0.41% to 32,908 points), or the Nasdaq Composite (- 0.63% at 12,935 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 0.61% to 4,179 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 $1.0680. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $68.30.
On the macroeconomic agenda this Thursday, a battery of PMI in final data for the month of May, the consumer price indices in the Euro Zone at 11:00 a.m., the ADP survey on American employment and the weekly registrations for unemployment benefits at 2:30 p.m. The manufacturing PMI (ISM) will be unveiled at 4:00 p.m.
KEY GRAPHIC ELEMENTS
We placed the 7,310 point threshold under close surveillance, which was pushed down, on a wide gap, in high volatility, and in a rising volume level.
The intermediate bearish target that we identify, the 7088 points, has been reached. A reaction of protest is to be expected, with the support of files with strong Beta, on the automobile, energy or tech. We are closely monitoring the volumes on this reaction, to measure the purely technical aspect.
FORECAST
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 above the support at 7088.00 points.
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