CAC 40: A dominant red

(News Bulletin 247) – Red should dominate again on the Paris Stock Exchange this Friday, after the new decline on Wall Street yesterday, against a backdrop of warming long rates and the prospect of tighter monetary policy. The Nasdaq Composite, in the front line, lost 1.30% yesterday, bringing its reflux to 9.53% since the start of the year. Yesterday the CAC, in the game of rotation of sectors and styles of values, regained a little momentum during the sessions, thanks to Value files such as Vivendi (+ 1.47% to 11.75 euros), Engie (+1.69% to 13.732 euros), or Veolia Environnement (+2.23% to 33.00 euros).

“Some Fed doves recently said they were surprised by the “high level and persistence of inflation”, in particular in connection with these global logistics tensions. Which ends up reinforcing the market’s conviction that the Fed will have to its monetary policy dynamically.” notes Alexandre Baradez, IG France.

“It is therefore a much faster normalization of monetary policy than the previous one that will take place in the coming months. And the American markets have started to integrate this development since the beginning of the month with a rebound in rates and a decline in growth stocks and in particular technology stocks. 10-year Treasuries will therefore constitute a major market driver, including on this side of the Atlantic. And if our growth technologies (Cap Gemini, Dassault Systèmes among other representative files) are to be watched like milk on the fire, our KOHLs (equivalent in the stock market sense of GAFAM) are just as much. As a reminder, the acronym designates the luxury giants Kering, L’Oréal, Hermès and LVMH.

In summary and one week before the next Fed meeting, the tensions of the last few days on sovereign yields suggest that operators are counting on a sharper tightening than initially expected, with a possible first rate hike as early as March .

In terms of statistics, there were no surprises to report on inflation in the Euro Zone yesterday: the final data for December for the consumer price index showed an annualized increase of 2.6% (excluding volatile elements). Across the Atlantic, weekly jobless claims for the week narrowly missed expectations, at 286,000 new units, while the Philly Fed (Philadelphia Fed manufacturing index) rose to 23.2 points beating target.

On the other side of the Atlantic, the main equity indexes fell on Thursday, seriously jeopardizing their chance of building a reassuring weekly candle, the Dow Jones losing 0.89% to 34,715 points and the Nasdaq Composite 1, 30% to 14,154 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 1.10% to 4,482 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 $1.1340. 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 Friday, to follow in priority the index of consumer confidence in the Euro Zone at 10:00 am.

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. She is currently on 6,940 points.

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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