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Heavily penalized by Société Générale (-12.05%), whose new strategic plan received a cold reception, the Parisian market started to fall again (-1.39% to 7,276 points for the CAC), which returned to a flattened diamond chart figure. The firmness of crude oil prices and bond yields in the run-up to the Fed’s FOMC will also have weighed.
The Red and Black Bank presented a new strategic plan whose profitability objectives have – to put it mildly – disappointed shareholders. Its action recorded its biggest drop in one session since March 15, 2023 (-12.18%) and the outbreak of fears about the health of Credit Suisse.
The barrel of WTI continued its rise above $90 per barrel, to $91.20 this morning, increasing the pressure on the interest rate markets and hampering the chances of a soft landing for the main economic centers of the planet. “Already, the rise in oil prices must be seen as a new ‘tax’ on consumption, which should have a negative effect on activity,” underlines Sebastian Paris Horvitz, of LBPAM.
“Central bankers should take into account this recessive effect of the rise in the price of oil, while being concerned about its diffusion on the setting of companies’ sales prices, with the risk of further complicating the disinflation dynamic” , he adds.
To be complete in the values chapter, we will note the heaviness in the technology sector in the broad sense of CAC, like its representatives Cap Gemini (-2.44%), Wordline (-2.56%) or even Teleperformance ( -3.36%). On the small capitalization side, Gensights Biologics took 75% while its American partner successfully produced a first batch of Lumevoq that complied with good manufacturing practice standards.
On the other side of the Atlantic, the main equity indices pressed the pause button in the run-up to the Fed’s verdict which, while it should end in a status quo on the Fed Funds strictly speaking, should rhyme with firmness of intentions. In other words, in the event that terminal rates are reached, we would have to deal with them over a long period.
“If the 25 bp increase in the Fed Funds rate adopted in July was probably the last of the current cycle, the Fed will remain vigilant in the face of inflation and the first rate cuts will not take place before the second quarter of 2024,” warns César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.
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 $1.0680. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $91.20.
On the agenda this Tuesday, consumer price indices in final data for August at 11:00 a.m. as well as housing starts and building permits in the United States at 2:30 p.m.
KEY GRAPHIC ELEMENTS
Several observations at this stage, combined with each other, break the upward dynamic seen at the end of last week. First up is the high wick of Friday’s candle, which showed early weakness. The very wide gap on Friday was reduced by three quarters. Finally, the reintegration of the diamond is eloquent: only one session, that of Friday, saw its candle come out. We leave for a handful of sessions in this chartist figure at the end of which a strong energy will be released.
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 7436.00 points.
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