(News Bulletin 247) – The CAC 40 index lost 1.54% on Thursday, managing to preserve in extremis the symbolic threshold of 7,000 points, at 7,005 points. Growth stocks were heavily penalized, on the one hand under the effect of new losses from the Nasdaq Composite weighed down by Metaplatforms (ex Facebook), and the prospect of a monetary shift on the part of the ECB, a shift certainly much less tight than the one the Fed will try to negotiate. Yesterday Thursday marked the end of a new Board of Governors of the powerful monetary institution in Frankfurt.
Under pressure after the publication, on Wednesday, of an unprecedented surge in inflation in the euro zone (+5.1% over one year in December, + 2.3% corrected for the corrected prices of energy, alcohol and tobacco), Christine Lagarde acknowledged that the rise in consumer prices was stronger than expected, also admitting that the risks were on the upside, while repeating that she was counting on a slowdown in here the end of the year. The ECB President also assured that the institution’s Governing Council would not take a hasty decision on monetary policy but did not reaffirm that a rate hike this year was “very unlikely”, as she had said at the last meeting.
“The ECB has taken a further step by estimating that inflation was higher than expected and that it could remain so for longer than expected, at least for several months.”, for Vincent Manuel, Chief Investment Officer at Indosuez Wealth Management. “What has also changed”, he continues, “is the perception of the labor market, which should at some point generate upward pressure on the level of inflation, but to a lesser extent than ‘in the United States or the United Kingdom. With a record unemployment rate of 7% and a participation rate back to pre-pandemic levels, the labor market is perceived to be very strong and could lead to upward pressure on wages, which the ECB does not yet see. This can be interpreted as a critical point that will have an impact on ECB policy in the future.”
In terms of macroeconomic figures, it is employment that will attract attention to this second part of the week. Especially since the signals of tension are necessarily scrutinized as they constitute, with the dynamics of prices, an essential basis for reflection and work for the Fed in the construction of monetary policy. Verdict tomorrow with the results of the NFP report (for Non Farm Payrolls). Yesterday, the private human resources firm ADP highlighted a “destruction” of more than 300,000 jobs, where the financial community was rather expecting a soft landing, after almost 800,000 job creations in the private sector ( excluding agriculture) in December. And this Thursday, weekly jobless claims for week 04 came out down, beating expectations, at 238,000 units.
On the securities side, the pressure was strong on a certain number of files very clearly labeled Growth, like Hermès (-3.26% to 1,306 euros), Téléperformance (-3.42% to 330.50 euros), Dassault Systèmes (-3.77% to 41.395 euros), Cap Gemini (-3.86% to 187 euros), STMicroelectronics (-4.06% to 39.68 euros), Wordline (-4.53% to 42, 77 euros) or Soitec (-4.65% to 158 euros).
On the other side of the Atlantic, the main equity indices ended Thursday’s session in negative territory, with an amplifying effect on the Nasdaq Composite, rich in growth technology stocks. It dropped 3.74% to 13,878 points as the Dow Jones limited damage (-1.45% to 35,111 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 2.44% to 4,477 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.1450. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $90.90.
To follow on the agenda this Friday, in priority the federal monthly report on private employment in January (2:30 p.m.).
KEY GRAPHIC ELEMENTS
An oblique line of support gave way on Monday under the sectorally federated assaults of the selling camp, in a very high level of participation. This release of selling energy at this stage, in a single session (24/01), constitutes a major technical fact which characterizes the hypersensitivity of a market which is increasingly and continuously questioning the levels of valuation of the shares. . The entry into the bear market is not formally characterized, but the situation calls for the greatest vigilance under this slant. She was reinstated at the very end of the week. We put her under close surveillance.
In the immediate future, plotting a wedge in hourly data is not very engaging. The three-color flagship index came out yesterday, from below, in accelerating volumes.
FORECAST
In view of the key graphic 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 trading below the resistance at 7115.00 points.
Hourly data chart
Chart in daily data
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Source: Tradingsat
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