CAC 40: New measure of tensions on American employment

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For the second consecutive session, the CAC 40 index finished in balance, the hemorrhage being for the moment controlled after the exit from the bottom, Monday September 25, of a diamond chartist figure. The session was marked on the values ​​side by the dizzying fall of Alstom (-37.5%) in the wake of a warning.

The railway equipment manufacturer has issued a heavy warning on results and now anticipates a largely negative free cash flow for the financial year ending next March, with a disbursement of between 500 million and 750 million euros.

Operators are now focused on the publication, at 2:30 p.m. this Friday, of the monthly report on American employment. Naturally, any sign of relaxation in employment would be interpreted as an argument for the Fed to give a little “slack” on a very tight monetary rope… Note that the unemployment rate, in particular, is expected to fall at 3.7% of the active population, and the average hourly wage in the private sector is expected to increase by 0.3% monthly. The JOLTS report (new job offers) published Tuesday and the ADP survey will ultimately not have constituted a significant source of relief for a feverish market. Published yesterday, the weekly registrations for unemployment benefits, still close to the level of 200,000 new units, continue to illustrate the chronic tensions on the job market.

On the values ​​side, if the Alstom issue alone, by the power of its sell-offs, alone marked the session, another stock suffered significant sell-offs, Atos, while one of its minority shareholders, a fund manager, calls on the company to explain its management.

On the other side of the Atlantic, if red still dominates, the main equity indices ended Thursday’s session at levels close to equilibrium, like the Dow Jones (-0.03% at 33,119 points) or the Nasdaq Composite (-0.12% to 13,219 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.13% to 4,258 points.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0540. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $82.30.

On the agenda this Friday, the monthly federal Non Farm Payrolls report on employment for the month of September, at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The flagship tricolor index came out at the start of week 39 from the bottom of a “diamond” pattern; 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, and that of construction, which has begun to participate in the downward movement. A pullback on the diamond occurred on Friday 29/09, clearly, before a clear resumption of downward pressure. The bearish message is reinforced.

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 7200.00 points.

Hourly graph

Daily Data Chart