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Pre-opening data suggests a difficult start to the session on the Paris Stock Exchange, following the Fed’s Monetary Policy Committee yesterday. The FOMC certainly, unsurprisingly, ended with a status quo on the Fed Funds themselves, but a combination of indices suggest a final increase in rates before a very long pause in the altitude plateau…

The firmer than expected tone used by the Institution is justified by a stronger than expected resistance of the American economy after long months of restrictive monetary policy – the forecasts for growth rates and unemployment rates speak for themselves. Furthermore, the famous dot plots campaigned for slightly higher rates, for an even larger majority of members, before stabilization. As a reminder, dot plots are a dot graph showing the new key rate projections from Fed members. Compared to June, the hawkish camp has clearly gained strength.

In summary, a monetary context that is not conducive to the appetite for risk, particularly on growth stocks: the Nasdaq Composite index fell by 1.53% while the Dow Jones, rich in banks which can their performance in periods of high rates, will have contracted by only 0.22%. The American 10-year (Treasuries 10 yrs) continued to warm up, close to 4.42%…

On the stock side, Air Liquide lost 1.6% while Stifel sees “short-term challenges” for the stock and considers that the consensus on the company’s sales for the third quarter is now “demanding”. Outside the CAC 40, Ubisoft limited its gains to 2.1% after gaining more than 6% driven by the good commercial start of the new part of the series “The Crew”.

An update on other risky asset classes: around 8:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0690. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $90.00.

On the agenda this Thursday, the decision of the Bank of England, and across the Atlantic, weekly registrations for unemployment benefits and the Philly Fed manufacturing index 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 7500.00 points.

News Bulletin 247 advice

CAC 40
Negative
Resistance(s):
7500.00 / 7585.00 / 7740.00
Support(s):
7084.00 / 7015.00 / 6885.00

Hourly graph

Graph created from the software Prorealtime

Daily Data Chart

CAC 40: Dot plots weigh down the atmosphere (©ProRealTime.com)
Graph created from the software Prorealtime

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