CAC 40: Intense questions, in all directions

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Legitimately upset by the situation in the Middle East, the CAC40 fell again on Monday, losing 0.55% to 7,021 points. He finds the direction of exit of a large diamond figure which will have lasted four months. We will have noted the significant excitement of the market in its attitude towards high PER files, particularly in luxury. LVMH (-2.60%) will also publish its quarterly sales this evening: a real test for the entire French market. Furthermore, Air France, particularly exposed to renewed geopolitical tensions in the Middle East, dropped 8.48% to 11.412 euros.

The Dollar was already moving forward for its part, thanks to the support of its reputation as a safe haven, after the conflagration of the geopolitical situation in the Middle East, after the deadly terrorist attacks perpetrated by Hamas against Israel this week-end. However, no panic on the markets (shares, oil) has yet been reported.

“The coming days may bring more clarity on how long this conflict will last. But in the short term, we expect higher oil prices and supportive flows into traditional safe havens like the yen and gold “, dissects Mark Haefele of UBS.

In terms of statistics, knowledge of a further drop in the Sentix investors’ index in the Euro Zone (-21.9), a contraction nevertheless less strong than anticipated in the sense of the market consensus (-24). “The global economy is still in a difficult situation at the start of autumn in the northern hemisphere. In the euro zone, and particularly in Germany, the economic situation remains weak and recessionary trends persist. There is at least one slight glimmer of hope in the form of growing expectations. However, it would be premature to announce a turnaround. If we look further into other regions, we see a largely unchanged situation. Cooling trends dominate. Here too , no positive trend reversal is visible,” adds the Sentix in a commentary accompanying the raw data.

On the other side of the Atlantic, despite the conflagration of the situation in the Middle East, the main equity indices ended in positive territory, like the Dow Jones (+0.59% to 33,604 points) and the Nasdaq Composite (+0.39% to 13,484 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.63% to 4,335 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 $1.0560. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $85.80.

On the agenda this Tuesday, industrial production in the Euro Zone at 10:00 a.m. and the NFIB index of American small businesses at 12:00 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