CAC 40: PCE on the menu this Friday

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The CAC 40 index ended a series of 5 sessions of decline on Thursday, benefiting from reassuring data on German inflation, a consolidation in long rates on both sides of the Atlantic, and an easing on crude prices. Ultimately, the flagship French index will have accelerated in the second part of the session to close on its high points, up 0.63% to 7,116 points.

And this before the most anticipated publication of the week, namely the American PCE prices, the Fed’s favorite measure in its “assessment” of inflation, even before the famous CPI. The opportunity to recall that the PCE differs from the basic CPI (core CPI) in the sense that it only measures goods and services intended for and consumed by individuals. Prices are weighted based on total spending per item, which provides important insights into consumer spending behavior.

“The more concerning question, however, is how quickly inflationary pressures can ease as oil prices continue to rise, with the price of Brent crude oil moving ever closer to $100 per barrel, and how much effect this 30% movement since the summer lows will have on the global economy, consumer spending habits and, more importantly, corporate profit margins,” lists Michael Hewson of CMC Markets.

In terms of statistics, on Thursday, weekly registrations for unemployment benefits, still close to 200,000 new units, illustrate the chronic tensions on the job market. As for Q2 GDP, in final data, it is confirmed at 2.1%, against a consensus of 2.2%.

On the values ​​side, TotalEnergies ended up 1.1%, after setting a new record at 64.55 euros during the session. The stock was also supported by the good reception of the investor day on Wednesday afternoon. Eutelsat gained 2.3% after announcing the finalization of its merger with OneWeb.

On the other side of the Atlantic, the main equity indices ended Thursday’s session in the green, like the Dow Jones (+0.35% to 33,666 points) and the Nasdaq Composite (+0 .83% at 13,201 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.59% to 4,299 points.

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 $1.0590. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $92.90.

On the agenda this Friday, to follow in priority the PCE prices at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The flagship tricolor index came out at the start of the week from the bottom of a “diamond” figure; we were awaiting confirmation, in particular from a sectoral federation, since the luxury sector alone is not enough to categorize the movement. We had participation yesterday from the technology sector, and to some extent from the automotive sector. A pullback on the diamond is not excluded, before bearish tensions resume.

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 7046.00 points.

Hourly graph

Daily Data Chart