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With the combined support of an easing of the interest rate markets in the Euro Zone and a satisfactory salvo of quarterly copies of American banks, the CAC40 managed to regain a few points on Tuesday. The flagship Parisian index, in volumes however shy, regained 0.38% to 7,320 points.
Klaas Knot, president of the Bank of the Netherlands and member of the ECB’s governing council, said on Tuesday that rate hikes after July were not “a certainty” but “at most a possibility”. These comments give investors hope that the ECB’s monetary tightening policy is coming to an end. What feed a little more the optimism of investors on the orientation of the monetary policy of the European institution.
The market also remains focused on the intentions of the Fed, whose scenario of a 25 basis point increase in its Fed Funds does not seem in any way upset by the reassuring data on inflation published last week. We are talking about the next FOMC (Monetary Policy Committee) deadline at the end of the month.
Afterwards [Alexandre Drabowicz, Chief Investment Officer d’Indosuez WM] sees “a plateau in the coming months.” The asset management decision maker [pense] that the Fed wants to keep real rates around 1.5%, placing the United States among the most restrictive in terms of monetary stance among the developed economies (0% in the euro zone and 0.6% in the United Kingdom, For example).
Drabowicz views the Fed’s “skip” (not “pause”) and bullish projections as a smart way for the Fed to step back and analyze the effects of its monetary policy without the market interprets this action as a pause that would immediately lead to rate cuts. In other words, the Fed wants to make sure the market understands that rates will stay “high longer”, which could allow it to orchestrate the disinflation without pushing the US economy into recession.”
It is the whole question of a “soft landing” that remains unanswered. In any case, yesterday’s statistics militated for a contraction in consumption, the main driver of wealth creation across the Atlantic. Retail sales came out well below expectations for the month of June (+0.2% against a target of +0.5%). Target completely missed also for the federal monthly report on industry (volume of production and rate of use of productive capacities).
In terms of values, SES-Imagotag rose by 7.4% benefiting from a contract with the “largest furniture distributor in the world” of Swedish origin, without however naming its partner (if you think of Ikea, you think like us ). The stock is also supported by the resumption of coverage from Berenberg who recommends buying the stock. Casino fell 10% as the stock resumed trading after being suspended the previous day. The group has decided to continue discussions with a group of investors led by Daniel Kretinsky and who must inject equity. The company intends to complete its financial restructuring by the end of the month. Aramis Group returned 7.9% as the market sanctioned the company’s point of activity in the period from April to the end of June, marked by a drop in sales of reconditioned vehicles.
On the other side of the Atlantic, the main equity indices ended Tuesday’s session in the green, like the Dow Jones (+1.06% to 34,951 points) or the Nasdaq Composite (+0 .76% at 14,353 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.71% to 4,554 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 $1.1220. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $75.20.
On the agenda this Wednesday, to follow in priority consumer prices in the Euro Zone at 11:00 a.m., as well as housing starts and building permits across the Atlantic at 2:30 p.m.
KEY GRAPHIC ELEMENTS
We are at the heart – that is to say in its broadest phase – of a diamond figure. As a reminder, this is a figure close to a rhombus. Graphically, the diamond looks like a more or less flattened diamond: at the start of the pattern’s formation, prices move inside a widening wedge, then, halfway through, they oscillate at inside a tapering triangle.
The intense volatility on Thursday 06/07 accredits this thesis, as does the rebound over the whole of the past week, at this stage. We are approaching a level close to the upper part of this diamond, with the formation of a significant upper wick on Thursday’s candle 07/13. More than ever, a contrarian attitude to any work on the index is key.
The exit direction of the diamond will be decisive. We are leaning towards a bottom exit. Volumes, volatility and above all a sectoral federation will fully confirm this.
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 7084.00 points would relaunch the selling pressure.
The News Bulletin 247 board
Hourly data chart
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