CAC 40: Good news from China

(News Bulletin 247) – While geopolitical events weigh on investor morale, they prefer to look at the glass half full and welcome the news coming from China. Indeed, following an explosion in a hospital in Gaza, which Israel and the Palestinians mutually attributed to each other, Jordan canceled a summit during which President Biden was to meet the Jordanian and Egyptian leaders, as well as Mahmoud Abbas, the president of the Palestinian Authority, a Jordanian official said. This bad news on the diplomatic level was overshadowed early this morning by the publication of good figures in China. China’s gross domestic product grew 4.9% year-on-year in the third quarter, beating market expectations. This announcement should benefit the luxury sector, which has been in difficulty for several weeks. Furthermore, statistics on retail sales in the United States in September published yesterday afternoon came out well above expectations. This macroeconomic information raises the chances of having a new rate increase from the American central bank before the end of the year. Today, we will monitor the behavior of semiconductor stocks. Stocks in the sector sold off yesterday after the Biden administration stepped up efforts to limit China’s access to cutting-edge computer chip technology. On the microeconomic level we will follow the publications of Tesla, Adidas and ASML in particular.

KEY GRAPHIC ELEMENTS

Technically the index has reacted twice the last two days in contact with its lows. An opening in a bullish gap could give rise to sales to return to test the zone. On the other hand, if from the opening the buyers take control and do not fill the gap a rebound could take place towards 7200 points.

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