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We are on July 4, the anniversary of the independence of the United States, a public holiday across the Atlantic when Wall Street will be closed, depriving the financial community of precious landmarks. However, the European markets will be able to continue to rely on the latest statistics on manufacturing activity in Europe, to digest the powerful advance of the past week, close to 7,400 points. Yesterday the CAC contracted by 0.18% to 7,386 points, and the DAX by 0.41%.
Regarding the final data of the PMI industrial activity indicators in the Euro Zone for June, it is particularly the German component that challenges, coming out below the first estimates, at 40.6, the lowest since June 2020.
“It appears that the (capital intensive) manufacturing sector is taking the brunt of the ECB’s interest rate hikes with increasing difficulty, as evidenced in particular by the first decline in employment recorded since January 2021 and the one of the strongest declines in purchasing activity since the start of the survey”, comments Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
“In terms of demand, it was in Germany (followed by Italy and France) that companies reported the weakest new order entries at the end of the second quarter,” he added.
Operators will be able to digest the latest inflation figures, on both sides of the Atlantic, showing a lull in price dynamics, mainly due to energy and food.
“If the scenario of a new rate hike by the Fed at the end of July still holds true (more than 85% probability), with a voluntary Jerome Powell during his last declarations, [Thomas Giudici, chez Auris Gestion] considered[e] nevertheless that a new break is still likely”.
“In the euro zone, the fall in inflation figures should, however, be insufficient for the ECB. new and core inflation is thus up slightly over the month (5.4% against 5.3% in May)”, continues the head of bond management at Auris Gestion.
On the values ​​side, Casino lost an additional 3.34%, in search of fresh money. The action CNova (e-commerce division of the distribution group) collapsed by nearly 20%. The point on the file here. In addition, investors moved away from luxury after the publication of a deterioration in manufacturing activity in China (Hermès lost 1.7%, LVMH returned 1%) to buy shares of groups with valuation multiples. low, like Worldline, which ended up 3.6%, TotalEnergies 1.8% and Société Générale 1.1%.
On the other side of the Atlantic, the main equity indices ended without a big difference compared to Friday, in limited initiatives on the eve of a public holiday, and in the absence of a fringe of investors . The Dow Jones climbed 0.03% to 34,418 points and the Nasdaq Composite 0.21% to 13,816 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, eroded 0.12% to 4,455 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 $1.0910. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $70.00.
On the agenda this Tuesday, the German trade balance, which has just been published for the month of May. Its surplus of 14.4 billion euros came out significantly below market expectations.
KEY GRAPHIC ELEMENTS
Last week’s weekly candle shows the relief of a financial community which is simultaneously witnessing a soft landing for the US economy, with no new unpleasant surprises on the inflation front. The next resistance levels are located at 7,500 then 7,585 points.
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 7410.00 points would revive the tension in the purchase. While a break of 7162.00 points would relaunch the selling pressure.
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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.
