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By losing 0.27% to 7,296 points on Friday, with the confusing verdict of the NFP report on US employment, the CAC 40 completed the course of a weekly doji candle, with a very pronounced upper shadow. A situation that graphically reflects growing nervousness. Who should not disappear at the beginning of the week, in the absence of benchmarks from Wall Street, which will remain closed for a holiday (Labor Day).

Let us first dissect the content of No Farm Payrolls, federal monthly report on US private employment, statistical high point on Friday. While it does not allow us to formally conclude that there has been a lasting decline in tensions on the job market across the Atlantic, it is clear that certain signals are encouraging. In particular, the unemployment rate, expected to be stable at 3.5% of the active population, rose significantly, to 3.8%, making it possible to envisage a cooling of the economic machine…. That’s good the declared objective of the Fed, after all!

In addition, average hourly wages will have increased in August by only 0.2% from one month to another, where the consensus foreshadowed an increase of 0.3%. This is also an encouraging sign that can dismiss the specter of the price/wage spiral. On the other hand – and this is where the shoe pinches – the number of job creations in the private sector, excluding agriculture, amounts to 187,000, against a target of 169,000 and a month of July revised to 157,000.

The reaction on the bond market is very discreet, as the signals sent are so paradoxical.

“The 187,000 increase in non-farm payrolls, the rise in the unemployment rate and slowing wage growth in August all point to labor market conditions approaching pre-pandemic norms,” ​​Capital Economics said. . “This reinforces our belief that the Fed’s next action will be an interest rate cut in the first half of next year,” the think tank continues.

To be statistically complete, the ISM manufacturing index, a closely monitored indicator of industrial activity, came out at 47.60 in August, slightly above the target, but significantly below the 50 point mark, which separates construction an expansion (above) of a contraction (below) of the sector under consideration.

In terms of values, Renault suffered, losing 6.25% to 35 euros all round, while UBS downgraded its advice on the value to “sell”, worrying about competition from Chinese players and the valuation of its future subsidiary dedicated to electricity, Ampere. The (para)oil groups gained ground, Vallourec taking 1.6% and TotalEnergies 1.4% with the support of oil prices.

On the other side of the Atlantic, the main equity indices ended at levels close to equilibrium, investors appearing puzzled after the publication of the NFP report. If the Dow Jones managed to grab 0.33% to 34,837 points, the Nasdaq Composite remained stable at the close, slightly above 14,000 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, eroded 0.18% to 4,515 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 $1.0790. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $85.00.

On the agenda this Monday, to follow in priority the Sentix index of investor confidence at 10:30 a.m.

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. Another is the weekly candle pattern for the week ending September 1st. Failure against the upper limit of the large diamond is validated.

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 7398.00 points.

The News Bulletin 247 board

CAC 40
Negative
Resistance(s):
7398.00 / 7436.00 / 7500.00
Medium(s):
7084.00 / 7015.00

Hourly data chart

Graphic made from the software Prorealtime

Chart in daily data

CAC 40: The barrel gets involved (©ProRealTime.com)
Graphic made from the software Prorealtime

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