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Congestion, narrow margins, torpor, all the expressions traditionally used to describe this type of transient market situation, not without nervousness, are suitable for describing the behavioral psychology of the very short term on the CAC 40 (+0.27% yesterday). 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.
Last week was “marked by the bipartisan agreement suspending the debt ceiling in the United States until 2025, making it possible to eliminate the risk of a payment default which could have occurred on June 5”, note Crédit Mutuel AM strategists. “With this threat averted, attention has gradually turned to continued tightening by the Fed, whose members are wondering about a possible hike in key rates in June. The latest economic statistics in the United States show a job market resilience, while manufacturing activity continues to show weakness.”
In terms of economic statistics, operators have just learned of a stronger than expected rise in weekly registrations for unemployment benefits, to 261,000 new units. Earlier in the day, operators took note of a contraction of 0.1% of GDP in the euro zone in the first quarter, against an increase of 0.1% in the first estimate.
In terms of values, auto parts manufacturers Valeo (+4.8%), Forvia (+3.7%) and Plastic Omnium (+2.3%) were supported by announcements from Sweden’s Autoliv, which showed its determination to negotiate price increases with its customers to pass on inflation.
On the other side of the Atlantic, the main equity indices ended Thursday’s session in the green, like the Dow Jones (+0.50%) or the Nasdaq Composite (+1.02%) . The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.62%.
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 $1.0770. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $72.00.
On the macroeconomic agenda this Friday, very little to eat apart from Italian industrial production at 10:00 am.
KEY GRAPHIC ELEMENTS
Here are the technical elements that we presented on Friday 02/06 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. We are currently in the heart of this area.
FORECAST
In view of the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that a crossing of 7858.00 points would revive the tension in the purchase. While a break of 7088.00 points would relaunch the selling pressure.
The News Bulletin 247 board
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
