CAC 40: Tensions on energy demand raise questions

(News Bulletin 247) – Reassured by the level of growth in China, the Paris market started week 3 on the right foot (+0.82% to 7,201 points), in volumes however very timid, due to the closure of Wall Street for a holiday (Commemoration of the birth of Martin Luther King). The market remains volatile, in a context of pressure on prices, particularly in energy.

The main market drivers will remain the inflation outlook on both sides of the Atlantic, government bond yields, and the calendar of the main central banks. While the Minutes, by their tone, refreshed the atmosphere at the start of the year, 3 increases in federal rates seem to be an accepted scenario. The boss of JP Morgan even expects 4 increases. Jamie Dimon anticipates that inflation will remain well above the Fed’s 2% target in 2022 and is therefore banking on more than 4 rate hikes from the central bank this year, which will generate more volatility.

“As for the Fed, the market is waiting, as of its next meeting, for confirmation elements as to the reduction in asset purchases, the pace of rate hikes, or even a reduction in the size of its balance sheet”, notes Jean -Jacques Friedman – Investment Director of VEGA Investment Managers, a subsidiary of Natixis Wealth Management.” On this occasion, the Fed could moderate all of its expectations while maintaining its credibility in the face of inflation statistics which have not further improved, in particular due to the consequences of Omicron on the supply circuits.”

Operators on Monday took a close look at growth data in China this morning, the main statistical meeting on Monday. In the fourth quarter, growth rose at an annualized rate of +4.0%, well above expectations. This did not prevent the People’s Bank of China from lowering its key rates, in contrast to its main counterparts, to further boost growth. It should be noted that industrial production, at +4.3% over one year in volume, also exceeded expectations.

On the values ​​side, to report the beginning of a technical rebound of dispute on a certain number of “Growth” files, like Christian Dior (+ 2.78% to 683.0 euros), or Hermès (+ 3.58% at 1,345 euros). EDF lost a further 4.21% after falling nearly 15% the day before the French government’s announcement of new measures to limit the rise in electricity prices and the concomitant revision of the production forecast. of the energy company’s nuclear fleet.

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 1,1400$. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around 85,30$.

To follow on the agenda this Tuesday, in priority the ZEW index of confidence in the German economy at 11:00 a.m. and across the Atlantic, the manufacturing index of the NY Fed (Empire State) at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The underlying trend is not threatened at this stage, but it is clear that the losses on Wall Street last week had repercussions in Paris, in the form of one-off and targeted profits in Paris, profit taking whose extent must be considered in the light of initial progress, dossier by dossier. All the same, we remain well above a bullish slant and the 100-day moving average (in orange), benchmarks which gradually tend to merge, and which will therefore gain in technical significance. We are leaning towards the scenario of a price approach to this support level.

PREVISION

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 7390.00 points.

Hourly data chart

Chart in daily data

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