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Under the pressure of long-term rates, whose surge was only barely calmed for a short while by the publication of inflation figures on both sides of the Atlantic at the end of last week, the CAC 40 accelerated his losses, fully validating his exit from the diamond figure, after pullback. After luxury, tech, automobiles, a new development: it is even the bank, although advantaged on paper in times of high rates, which is starting to show signs of fatigue. It should also be noted that one file lost almost 11% during the session, Edenred, after the comments of the Minister Delegate in charge of SMEs, Commerce, Crafts and Tourism Olivia Grégoire who mentioned a capping of commissions on restaurant vouchers which would reduce these same commissions.
Furthermore, the agreement reached in extremis to avoid the “shutdown” is in no way enough to boost risky assets. A last-minute agreement between Democrats and Republicans made it possible to avoid a shutdown of American federal services due to lack of funding, even though it only postponed the deadline by 45 days. “On a practical level, the Congressional agreement, as fragile as it may be, prevents us from being deprived of statistics coming from the Departments of Commerce and Labor, which would have put the Fed and the markets in the fog,” note the economists from Oddo BHF.
“As schizophrenic as it may seem, this news does not seem to constitute a real relief for the markets. Indeed, while a shutdown would have had a negative impact on American growth (of the order of 0.2 points of GDP per week according to analysts at Goldman Sachs) able to ease the pressure on rates a little, this emergency measure makes it possible to maintain short-term growth prospects and therefore supports the idea of a new rate increase by the Fed “, explains Thomas Giudici, head of bond management at Auris Gestion.
On the statistical side, investors have taken note of industrial PMI activity indicators whose messages come out divergent, a little better than expected in France, a little less good in Germany. But in the end, on a Euro Zone scale, the score is 43.4: this is in line with the first estimates. On the other hand, the American industrial PMI, which came out at 49.0, certainly still below the 50 point mark, was a good surprise in view of the much more pessimistic consensus.
On the other side of the Atlantic, the main equity indices ended Monday’s session in scattered order, like the Dow Jones (-0.22% to 33,433 points) or the Nasdaq Composite (+0 .67% at 13,307 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, ended on a balanced note at 4,288 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 $1.0470. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $89.30.
On the agenda this Tuesday, new job offers (JOLTS) at 4:00 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 on Wednesday from the technology sector, and to some extent from the automotive sector. It is now the banking sector which has begun its participation in the movement
A pullback on the diamond intervened on Friday, clearly, before a clear resumption of downward pressure.
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 7200.00 points.
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