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With no landmarks from Wall Street, remained closed due to a holiday (independence day), the Parisian market evolved within narrow margins, limiting its initiatives. In shrinking volumes, the flagship index of the tricolor, the CAC 40, will have contracted symbolically by 0.23% to 7,370 points.
While awaiting the final June services PMI data on Wednesday, operators were able to digest yesterday the industrial components published on Monday. It should be remembered that it was the German component in particular that made the markets wince, coming out below the first estimates, at 40.6, 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 are also digesting 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] consider[e] nevertheless that a new break is still likely”.
“In the euro zone, the decline in inflation figures should, however, be insufficient for the ECB. Indeed, if headline inflation over one year fell from 6.1% to 5.5% over the month, prices in services rose to 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.
Side values ​​Casino Guichard (+16.22% before being suspended) has decided to publish already the presentation of the offers received for the restructuring of its debt. Boiron also asked the stock market operator to suspend the listing of its shares. And the reason for this request was revealed shortly before the Paris market closed. The Boiron family will launch a simplified takeover bid for the shares in circulation that it does not yet hold, with a view to delisting its laboratory. Finally, Virbac ended down sharply by 9%, the company being penalized by the lowering of its outlook for 2023 due to the slowdown in the animal health market.
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 $1.0890. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $71.00.
On the agenda this Wednesday, to follow in priority the final PMI services data for June (summary data for the Euro Zone at 10:00 a.m.), orders to American industry at 4:00 p.m. and the Fed Minutes at 8:00 p.m. This is the chronological report of the debates between Fed members during the last FOMC.
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. This would require a sectoral federation within the ACC, which we do not have. The alternative scenario is one of widened, diamond-like consolidating congestion.
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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