(News Bulletin 247) – If the Parisian market should attempt a rebound this Tuesday at the opening, the change of atmosphere has indeed been validated since yesterday, with a fall of nearly 4% in the CAC 40 (-3.97% at 6,787 points) in particularly strong volumes, under the double fire of the tougher tone of the Fed and geopolitical fears linked to the Ukrainian file.
As a new meeting of the Fed’s Monetary Policy Committee (FOMC) opens on Tuesday for two days, the tensions of recent days on sovereign yields suggest that operators are counting on a sharper tightening than initially expected, with possibly a first rate hike as early as March. Verdict after two days of meeting on Wednesday. The press conference will be dissected there in its least inflections of elements of language. The 10-year Treasuries firmed up, around 1.76.
The fact that the armed forces of NATO countries are on alert, while Western countries are worried about a possible Russian military intervention in Ukraine in the coming days or weeks, heightens the concern of investors, who have preferred get rid of risky assets such as equities, regardless of sectors or factors for that matter. Tech or luxury underwent significant releases, as did automotive or banking. Let us quote, among a multitude of files having undergone a powerful reflux, emblematic files with barometer value such as Société Générale (-5.60% to 31.115 euros), Cap Gemini (-6.15% to 190.70 euros), Wordline (-7.28% to 42.0 euros), Stellantis (-7.43% to 16.764 euros), Soitec (-7.88% to 155.40 euros), or Saint Gobain (-8.46% to €57.96).
In addition, the title of the operator of retirement homes Orpea collapsed by 16.1% when the group asked for its trading to be suspended, a few days before the publication, by Fayard, of a book entitled “Les gravediggers “promising “revelations about the system that mistreats our elders”. In its wake, the other sector specialist Korian also collapsed (-14%), even though he was not the subject of specific accusations.
In terms of statistics, operators took note of the manufacturing PMI in flash data for January in the Euro Zone, clearly beyond expectations, at 59.0, thanks to the support of the German component (60.5). For services, the score misses – but by very little – the target.
On the leading industrial power in the Euro Zone, Phil Smith, associate director at IHS Markit, sheds the following light: “industry [allemande] should experience a recovery in 2022 as supply bottlenecks ease, but seeing growth at this speed is already a welcome development. The drag on production due to supply chain issues appears to have eased further, although there is still plenty of room for improvement on this front.”
On the other side of the Atlantic, the main equity indices ended in positive territory, narrowly, after a session that was essentially spent in the red. The Dow Jones managed to grab 0.29% to 34,364 points and the Nasdaq Composite 0.63% to 13,855 points (low point at 13,094 points all the same!). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, managed to nibble 0.28% to 4,410 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 1,1310$. A barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $85.60.
To follow on the agenda this Tuesday, the IFO business climate index in Germany and the consumer confidence index (Conference Board) in the United States at 4:00 p.m.
Note, for holders of positions on the DR: the monthly liquidation will take place at the end of the session on Wednesday, January 26. The calendar of liquidation dates over the year is available here.
KEY GRAPHIC ELEMENTS
An oblique line of support gave way yesterday under the sectorally federated assaults of the selling side, in a very high level of participation. This release of selling energy at this stage, in a single session, is a major technical fact that characterizes the hypersensitivity of a market that is increasingly and continuously questioning the levels of valuation of shares. The entry into the bear market is not formally characterized, but the situation calls for the greatest vigilance under this slant.
PREVISION
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 7000.00 points would revive the tension in the purchase. While a breakout of 6747.00 points would revive selling pressure.
Hourly data chart
Chart in daily data
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Source: Tradingsat
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