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Against a backdrop of intense questioning about the “effects” of a firm monetary policy on both sides of the Atlantic against inflation, the Paris market lined up a third session of declines, increasing its weekly balance sheet during the first part of J Powell’s hearing before the House of Representatives Finance Committee. The three-color flagship index contracted by 0.46% to 7,260 points, in any volume, penalized in particular by tech. Dassault Systèmes lost 1.32%, Téléperformance 1.61%, CapGemini 2.15% and Wordline 2.15% as well.
The Fed Chairman hammered home the need to keep pressure on price momentum through firm policy, a week after taking a very momentary pause on the Fed rate hike. The traditional biannual hearing continues this Thursday in front of an audience of Parliamentarians, in the Senate this time. Each sentence uttered by Jerome Powell will be an opportunity to detect clues about the Fed’s future intentions to fight inflation. Fight inflation without slowing down the economic machine of the four irons. The recent publication of the ISM services had as a reminder cast a chill.
Jerome Powell has indeed estimated that the key rates of the Fed should still take the upward slope in the coming months, even if the rate of increases should be less sustained than previously.
On the economic statistics side precisely, apart from a few figures without relief on American real estate, few things to put in their mouths on this first part of the week. The statistical high point will no doubt be reached on Friday, with the publication of the PMI activity barometer indicators.
For César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management, “the purchasing managers’ indices (PMI) published this week could confirm that the American economy is heading for a soft landing.”
Expectations for this data flash for June are 48.5 for industry, and 54.0 for services in the United States.
It will be recalled that by construction, a score lower than 50 evokes a contraction of the sector considered, and conversely, a score higher than the bar of 50 evokes an expansion. These surveys are carried out with purchasing managers, for the propensity of these professionals, by the very nature of their activity, to “feel” the health of business in the coming months. Hence their name PMI (Purchasing Managers Index).
For Europe too, these indicators are eagerly awaited. Particular mention should be made of the German industrial PMI, which will be watched very closely as the leading economic power in the Euro Zone has entered a technical recession. He is expected at 43.6 points.
Go here to view the full consensus on these PMIs.
On the values ​​side, we will insist on the powerful rebound, against the trend, of Casino Guichard, after a new movement in the capital of the highly indebted distribution group. CNova, the group’s e-commerce subsidiary, gained 4.82%, taking second place in compartment A of the rating, ahead of three heavyweights in the (para)oil industry: TotalEnergies (+2.75% ), Schlumberger (+3.04%), and Vallourec (+3.85%).
On the other side of the Atlantic, the main equity indices lost ground on Wednesday, like the Dow Jones (-0.30% to 33,951 points) and especially the Nasdaq Composite (-1.21% at 13,502 points). The S&P500, benchmark barometer of risk appetite in the eyes of fund managers, lost 0.52% to 4,365 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 $1.0980. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $72.20.
On the agenda this Thursday, to follow as a priority, the monetary policy decision of the Bank of England, which follows worrying inflation figures, at 1 p.m., weekly registrations for unemployment benefits in the United States at 2:30 p.m. , and the continuation of the half-yearly hearing of J Powell before the Parliamentarians at 4:00 p.m.
KEY GRAPHIC ELEMENTS
While the attraction effect of the gap of May 24 (its remainder, in reality) was felt, the CAC came to fail almost exactly on its lower limit on June 14 before falling back before the close. Symmetrically inverse session the next day, showing all the versatility of the market. The flagship index came at the very end of the week to completely fill this gap, without taking advantage of it to further emancipate itself. Moreover, the bearish harami drawn on Monday invites us to maintain a particularly cautious attitude. Note the imminent passage of prices below the 20-day moving average (in dark blue).
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 7410.00 points.
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