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On the eve of a very important meeting of the ECB Governing Council, the CAC lost 0.42% to 7,222 points, in the terminal part of a diamond of energy accumulation. It is at 2:15 p.m. that the powerful monetary institution in Frankfurt will give its verdict on the key rates (a status quo, probably), and at 2:45 p.m. that a highly anticipated press conference will be held: operators will have the opportunity to judge how extent and for what duration the ECB wishes to maintain a firm monetary course. Furthermore, updating economic forecasts will constitute an essential basis for work in the trading rooms.
M Baradez (IG France) goes against the dominant sentiment: “A new ECB rate increase in September seems likely at this stage even if we sense in the latest speeches from ECB members that we are approaching the peak on rates. The scenario of a final increase before a definitive pause could be the right one.”
For his part, Julien Russo, senior portfolio manager, Money Markets, at Swiss Life Asset Managers France thinks “that the ECB should choose the status quo even if it seems divided on the subject. Recent statements from some of its members allow a certain uncertainty to be maintained before the monthly meeting of the Governing Council on Thursday. In any case, the decision will not be taken, barring a completely unexpected scenario, unanimously.”
“We believe that key rates should then remain on a “plateau” for many months, a plateau which could continue throughout 2024. The decline in tensions on the American labor market and the deterioration of the economic situation in the euro zone, with in particular the fear of a recession in Germany, are calling for a pause in the rise in rates.”
While waiting for these major meetings (2:15 p.m. and 2:45 p.m. as a reminder), operators will digest the figures for the consumer price indices in the United States (August), published yesterday. These figures, by exceeding expectations, argued for maintaining a firm monetary policy for many months. In annualized data, prices increased by 3.7% (compared to a consensus of 3.6%) on the broadest base of products, i.e. food and energy included.
On the values side, we will note the good performance of the automobile sector after the announcement from the European Union which has decided to investigate the subsidies granted to Chinese automobile groups. Renault gained 2.07% and Forvia 0.6%. Red lantern of the CAC 40, Alstom, on the other hand, fell by 3.9%, penalized by Barclays which began monitoring the stock at “underweight”, the equivalent of sales at the British bank. The establishment is concerned about the railway equipment manufacturer’s cash generation, its debt, a slowdown in orders and even a downgrade from Moody’s.
On the other side of the Atlantic, the main equity indices closed in disjointed order on Wednesday, with the Dow Jones symbolically dropping 0.20% to 34,575 points and the Nasdaq Composite gaining 0.29% to 13,813 points. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, ended on an almost flat note near 4,470 points.
An update on other risky asset classes: around 8:00 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0750. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $89.00.
On the agenda this Thursday,
KEY GRAPHIC ELEMENTS
A directional change is imminent!
From August 10 to 18, in one go, the tricolor flagship index melted from one terminal to the other of the vast flattened diamond (diamond) which has concentrated its nervous oscillations since May 24, breaking in the process the line d neckline of a bearish chartist pattern at 7,250 points.
A continuation of the oscillations within the diamond is envisaged. Any release from the latter will give direction provided that the volumes, and a sectoral federation, are there…
Signs of fatigue within this diamond itself are already perceptible. The bearish all-encompassing of August 24, with a response on September 4, at the level of the median line of the diamond, constitute one. Another is the weekly candle structure for the week ending September 1st. The failure against the upper limit of the large diamond is validated.
To summarize, it is the direction of exit from this figure of congestion which will be fundamental, and will ultimately provide a lasting direction.
FORECAST
Considering the key graphical 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 below resistance at 7324.00 points.
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
