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In a context of persistent fears about the global economy, fears focused particularly on Germany and China, the CAC 40 lined up a fifth closing in the red on Tuesday, contracting by 0.34% to 7,254 points , after having a foray into the session below 7,200 points. The index is heading for a major graphical and technical test: that of the lower limit of a large flattened diamond congestion pattern, otherwise known as a diamond.
Signs of a slowdown in the global economy, particularly in China, are causing a stir. In China, the country’s economic situation is the subject of concern after a slowdown in services activity last month. The PMI-Caixin services index fell to 51.8 points in August, after 54.1 in July.
Beijing may have announced support measures, particularly in the very strategic real estate sector, as well as a reduction in taxes on stock market transactions, “these measures are for the moment more akin to scoops”, analyzes Thomas Giudici , head of bond management at Auris Gestion.
“Xi Jinping, who advocates financial discipline, finds himself blocked by his desire not to fall back into the excesses of past indebtedness. To this problem is added that of the currency, the renminbi having corrected sharply against the dollar while China seeks to further push its use internationally. While China naturally has the means to support its economy through large-scale measures, it seems for the moment to be taking small steps.”
In this context, it was naturally luxury stocks, very exposed to Chinese demand, which suffered significant profit taking, such as Hermès (-0.75%), LVMH (-1.75% ) and Kering (-2.19%). To be complete in terms of values, Crédit Agricole fell 2.02% after a downgrading of opinion from Goldman Sachs. Conversely, Renault gained 1.55% after announcing a valuation of 8 to 10 billion euros for Ampere, its 100% electric subsidiary whose IPO is scheduled for 2024. benefited from the firmness of crude oil prices, such as TotalEnergies (+2.01%), leader of the CAC40, or Schlumberger (+2.24%) and Vallourec, to a lesser extent (+1.03% ).
In terms of statistics, note the significant disappointment with the final data for the French services PMI, at 46.0 points, significantly below the very first estimates for the month of August.
Recall that after digesting the US employment report, published on Friday, investors took note on Tuesday of the Sentix index of investor confidence in the Euro Zone, down sharply to -21.5, lacking yet pessimistic expectations. .
“The situation in Germany remains particularly precarious”, can we read in a comment for the less decided accompanying the publication. The Sentix measured for this publication “the weakest values since July 2020, when the economy was slowed by the first confinement due to the coronavirus. Germany is also weighing heavily on the euro zone economy as a whole. The recession is deepening. But even in the United States, which has so far resisted well and defied the Fed’s restrictive policy, economic data is in sharp decline. The tipping point of a global recession is less distant than we think. might think so.”
Red dominated across the Atlantic on the equity markets, which started their week after a holiday Monday (Labor Day). The Dow Jones lost 0.56% to 34,641 points while the Nasdaq Composite remained almost stable at -0.08% to 14,020 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, lost 0.42% to 4,496 points, falling below the symbolic threshold of 4,500 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 $1.0730. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $86.20.
On the agenda this Wednesday, to follow in priority the PMI services ISM activity indicator at 4:00 p.m. and the Beige Book of the Fed at 8:00 p.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 of August 24, with an aftershock on September 04, at the level of the middle line of the diamond, constitutes one of them. Another is the weekly candle pattern for the week ending September 1st. Failure against the upper limit of the large diamond is validated.
To sum up, it is the exit direction of this congestion pattern that will be fundamental, and will finally give a lasting direction.
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
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