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The end of the toxic suspense surrounding the raising of the US debt ceiling, and the brighter horizon on the FOMC in June, which should end with a pause on rates, allow the main equity indices of the planet to find a little going, before the verdict of the NFP this Friday afternoon. Operators will take note of whether or not the degree of tension in the private employment market is confirmed, tensions already illustrated this week by the ADP survey, new job vacancies (JOLTS) and registrations for unemployment benefits. The CAC 40 index, which ended yesterday exactly at its opening levels, climbed 0.55% to 7,134 points.
After the House of Representatives, it was therefore the Senate which, unsurprisingly, voted for the agreement on raising the public debt ceiling, in return for major budget cuts. As (almost) every time, a solution was found in extremis, removing the specter of a payment default by the world’s largest economy.
In terms of statistics, it is therefore the NFP (Non Farm Payrolls), monthly federal employment report, which will be the highlight this Friday. On Thursday, while weekly registrations for unemployment benefits have just come out at a level relatively close to expectations, at 232,000 new units, the ADP (Automatic Data Processing) survey revealed job creations very clearly above the target, to 278,000 in the private sector (excluding agriculture).
Note the final data for the German manufacturing PMI (43.2), a score a little less worse than the very first estimates. First estimates which had then been a source of tension.
On the values ​​side, Casino Guichard has further melted, from 9.43% to 5.045 euros, against the backdrop of negotiations with its creditors on a debt restructuring. Ironically, its majority shareholder for more than 30 years, and CEO, Mr. Naouri, was in police custody as part of an investigation for price manipulation and insider trading. Airbus rose 2.8% as the aircraft maker could post 30% annual growth in aircraft deliveries in May, according to Reuters citing people familiar with the matter. Airbus also announced a firm order from Air Algérie for seven A330neo and A350 aircraft.
On the other side of the Atlantic, the main equity indices ended in the green on Thursday, like the Dow Jones (+ 1.21% to 15,853 points) or the Nasdaq Composite (+ 1.28% at 13,100 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained nearly 1% to 4,221 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 $1.0780. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $70.80.
On the macroeconomic agenda this Friday, French industrial production at 8:45 a.m., and the monthly NFP report on American private employment at 2:30 p.m. The consensus expects 193,000 job creations (excluding agriculture) and a very slight rise in the unemployment rate to 3.5% of the working population.
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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