CAC 40: Consumer prices at 2:30 p.m., the Fed keeps its fingers crossed

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

Without major statistical benchmarks on Monday, and awaiting the publication of consumer prices in the United States on Tuesday, the CAC 40 managed to gain 0.60% in the immediate vicinity of its 50-day moving average, slightly above -above the symbolic threshold of 7,000 points, in relatively timid volumes.

The CPI (consumer price index) will be published this Tuesday, at 2:30 p.m. (Paris time), one hour before the opening of the debates on Wall Street. The opportunity to further refine the effectiveness, at this stage, of many months of restrictive monetary policy. And to refine a little more if necessary the probability of having already reached, or not, a peak on the Fed Funds. On an annual basis, prices are expected, in the broadest base of products, to increase by 3.3%, compared to 3.7% the previous month. A real slowdown in price dynamics, therefore, constitutes the consensus for this major publication.

“It is still too early to say, and inflation may reveal surprises, but the succession of recent monetary policy decisions suggests the end of the cycle of monetary tightening initiated more than a year ago”, for Benoit Peloille, Chief Investment Officer of Natixis Wealth Management. “In any case, this is the message sent by the recent rebound in bond markets.”

On the value side, the market was kept in the green by industrial files such as Airbus (+1.37%), Stellantis (+1.85%) or Alstom (+2.37%). Excluding the flagship index Orpea recorded a very sharp drop of 14.5% on Monday, the operator of retirement homes having kicked off its major financial restructuring.

American investors are only reacting moderately to Moody’s decision to lower its outlook on the United States’ credit rating to negative. However, the rating agency did not change the American rating, still maintained at AAA. This decision comes amid the specter of a shutdown, that is to say a blockage of the federal administration if Democrats and Republicans do not reach an agreement on the budget for 2024, by midnight Friday evening. The clock is therefore ticking… On the indices, closes close to balance to report, like the Dow Jones (+0.16% to 34,337 points) and the Nasdaq Composite (-0.22% at 13,767 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, symbolically ended the session in red territory, by a handful of points (-0.08% to 4,411 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 $1.0700. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.40.

On the agenda this Tuesday, to follow in priority the ZEW index of confidence in the German economy at 11:00 a.m. and consumer prices in the United States at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The technical situation on the CAC 40 is quite readable: the index came out of a flattened diamond (diamond) pattern on September 25, which pushed the market into the red. Two pullbacks later, it was the turn of the symbolic threshold of 7,000 points to suffer the threat of prices, a threat put into effect on October 18, 19 and 20 in increasing trading volumes.

After the formation of a congestion figure near 6,800, week 44 will have been the scene of a significant technical reaction, orchestrated and amplified by the values ​​which had initially been the most mistreated. This energy, exhausted early, should give way to a rapid filling of the gap of November 2, just below the key threshold of 7,000 points.

Immediately, a phase of lateralization takes place in the immediate vicinity of this threshold.

FORECAST

Considering the key graphical factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.

We will take care to note that crossing 7200.00 points would revive the buying tension. While a break of 6948.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart