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Symbolically, the CAC 40 ended Thursday’s session in the green (+0.59%), which ended a prosperous month of November (+6.17%). This end of autumn 2023 will have been the scene of the confirmation of a very marked slowdown in the rise in prices, on both sides of the Atlantic. Just yesterday, new indicators, and not the least important ones, illustrated this major evolution of the macroeconomic landscape. PCE (Personal Consumption Expenditures), the preferred gauge of the American Federal Reserve (Fed) to measure inflation, increased by 3% year-on-year in November, compared to 3.4% last month. The “core” index, excluding energy and food prices, increased by 3.5%, a figure in line with the consensus of economists surveyed by the Wall Street Journal.
On this side of the Atlantic, operators have taken note of the first estimates of consumer prices for the month of November in the Euro Zone. And surprise, the dynamic of slowing inflation is even greater than expected. Excluding food, energy, alcohol and tobacco (elements considered volatile), prices increased at an annualized rate of 3.6% in November, compared to a target of 3.9% and a month of October of 4.2%! A very significant slowdown which should bring a little flexibility to the ECB’s monetary policy. “The larger-than-expected drop in inflation in November means it is becoming increasingly untenable for “European Central Bank (ECB) members” to pretend they are not even considering cutting rates “, explains Capital Economics. “We now expect a first drop for next June, rather than for September,” adds the think tank. All products combined, inflation is reduced to 2.4% according to this first estimate from EuroStat. The next publication covering all data for the month of November 2023 is scheduled for December 19, 2023.
Note among the many statistical indicators on the program yesterday, a significant deviation from the consensus for the Chicago PMI manufacturing index, which jumped to 55.8.
On the value side, STMicroelectronics gained 1%, benefiting from an increase in recommendation from JPMorgan to “overweight”. But the big hit of the day is signed Eurazeo. The investment company jumped 9.7% after having, during a day dedicated to investors, delivered its financial objectives and indicated that it wanted to generate 4.4 billion euros in excess capital over the period 2024- 2027, of which 2.3 billion will be returned to shareholders via dividends and share buybacks. Conversely, Orpea collapsed by 91.6%, the market (finally) becoming aware of the mega-dilution that awaits shareholders, while the group completed the first of its three capital increases.
On the other side of the Atlantic, the main equity indices closed in scattered order on Thursday, with the Dow Jones gaining 1.47% to 35,950 points with the support of the Chicago PMI while the Nasdaq Composite suffered from one-off profit taking (-0.23% to 14,226 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.38% to 4,567 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 $1.0910. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $75.80.
On the agenda this Friday, the Euro Zone manufacturing PMI index at 10:00 a.m., the ISM manufacturing PMI at 4:00 p.m. and a speech by J Powell, President of the Fed, at 8:00 p.m.
KEY GRAPHIC ELEMENTS
The 7,200 points, unambiguously exceeded on November 17 after pullbackare switched to intermediate support, above which the chart situation remains solid.
The attraction effect of the bearish gap of September 18 (upper limit at 7,366 points) will begin to be felt.
FORECAST
Considering the key graphical factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is above support at 7200.00 points.
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