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The renewed caution on the Paris market is confirmed as the monetary verdicts of the ECB and the Fed approach on June 14 and 15. The fear of a firm tone is palpable, in particular since the remarks deemed offensive by Christine Lagarde, and the creation of positions in the private sector in the United States.
According to comments reported by the Reuters agency, the central banker felt that she currently saw no “tangible proof” that underlying inflation (excluding energy and food prices) had reached “a peak”. Pricing pressures also remain “high”, she added, speaking at a hearing before MEPs. Clearly firm words, which set the tone before the Board of Governors in mid-June.
According to the figures of the last monthly federal report, the American economy would have created nearly 340,000 jobs in the private sector (apart from agriculture), exploding the target. What give new nodes to the brain of the Fed, whose obsession is the runaway spiral prices wages, hitherto avoided.
Moreover, the surprise decisions of the Bank of Australia, then the Bank of Canada, to raise their respective key rates by 25 bps, can only resonate with difficulty in the ears of the market. The CAC 40 symbolically contracted yesterday, by 0.09% to 7,202 points.
“Regarding the Fed, no FOMC member will speak this week due to the traditional “quiet period”, before the monetary policy decision expected next Wednesday,” notes Vincent Boy (IG France). “Markets are pricing in a pause from the Federal Reserve, having hiked rates relentlessly for more than a year now, but the latest speeches from Fed members have brought out a mixed message and investors will await clarification on its outlook.”
In terms of statistics, German industrial production for the month of April was very clearly disappointing, completely missing expectations. After the disappointing factory orders published earlier in the week, it is the manufacturing sector of the Eurozone’s largest economy as a whole that is causing concern.
As for values in Paris, Teleperformance gained a little ground (+2.3%), while Royal Bank of Canada certainly slashed its price target on the title, but also confirmed its opinion of outperformance. In summary, the Canadian bank considers that the market’s fears about the emergence of generational AI which would break the group’s activity are exaggerated. Atos fell 4.6% after gaining around 3% early in the session. The digital services company has revised upwards its medium-term ambitions for its historical businesses.
On the other side of the Atlantic, the main equity indices ended in scattered order, the Dow Jones grabbing 0.27% to 33,665 points, and the Nasdaq Composite falling 1.29% to 13,104 points. The S&P500, benchmark barometer of risk appetite in the eyes of fund managers, lost 0.38% to 4,267 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 $1.0710. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $72.40.
On the macroeconomic agenda this Thursday, to follow as a priority, the weekly registrations for unemployment benefits in the United States at 2:30 p.m.
KEY GRAPHIC ELEMENTS
Here are the technical elements that we presented on Friday before the opening:
“The intermediate bearish target that we identify, 7,088 points, has been reached. under close surveillance the volumes on this reaction, to measure the purely technical aspect.”
These volumes, without being thick, were significantly higher than those observed the day before. Meanwhile, intra-day gains were plentiful. Finally, the previous day’s session resulted graphically in a candle with a red body without a shadow.
Under these conditions, the current working band is between 7,088 points and the bearish gap of May 24, whose upper limit is worth 7,378 points.
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 7378.00 points.
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