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The CAC 40 index (-0.12% on Wednesday, at 7,364 points) resisted, with the support of an easing on the American 10-year, an easing which is explained by a drop in tensions on the US job market. The new job offers (JOLTS) on Tuesday and the survey by the ADP firm on Wednesday relieved the operators, coming out at lower levels than the respective consensus had predicted.
The private firm Automatic Data Processing has therefore just published an estimate of 177,000 of the number of jobs created in August in the private sector, excluding agriculture. There too, it is below expectations, and therefore reassuring: the specter of a price/wage spiral seems definitely behind us. We will have confirmation or denial of this at the end of the week with the monthly federal NFP (Non Farm Payrolls) report.
What for the moment bring its share of relief, after a symposium in Jackson Hole auguring the maintenance of high rates for many more months.
“It appears Mr Powell has sought to dispel market speculation about a higher inflation target” for strategists at Muzinich & Co. The Fed’s Dot Plot, which shows estimates of what the federal funds rate, the short-term interest rate controlled by the Fed, should be. Overall, the Fed reaffirms “the need for agile policy “in an environment of uncertainty, with a moderately hawkish bias.”
On the stock side, the mining and energy sectors suffered the brunt of investor fear after the announcement of a coup d’etat in Gabon. Highly exposed by the very nature of its activities locally, Total Gabon collapsed by 14.50% to 158.20 euros. Eramet for its part suffered a fall of 16.54% to 63.60 euros and Maurel & Prom 14.83%. Airbus stood out a little, signing the second rise in the CAC 40 with an increase of 1%, supported by Stifel, which resumed its coverage with advice on buying.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in green territory, like the Dow Jones (+0.11% to 34,890 points) or the Nasdaq Composite (+0 .54% to 14,019 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, climbed 0.38% to 4,514 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 $81.50.
On the agenda this Thursday, the PCE prices at 2:30 p.m. The publication is major, in the sense that it is the preferred measure of the Fed in its assessment of inflation. It therefore feeds its reflection in the construction of its monetary policy.
KEY GRAPHIC ELEMENTS
From August 10 to 18, the flagship tricolor index melted from one terminal to the other of the vast flattened rhombus (diamond) which has concentrated its nervous oscillations since May 24, breaking the line of neckline of a bearish chart pattern at 7,250 points. A continuation of the oscillations within the diamond is envisaged. Any exit from the latter will give a direction provided that volumes, and a sectoral federation, are there…
Signs of fatigue within this diamond are already noticeable. The bearish engulfing August 24, at the midline of the diamond, is one. The test of the upper limit of the diamond on Thursday, and the final structure of the weekly candle, Friday after the NFP, will be decisive.
FORECAST
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 7500.00 points.
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