(News Bulletin 247) – If the CAC 40 index will have avoided the validation of a combination in three crows on Monday, with a reaction during the session, it is forced to note the absence of sectoral and factorial federation of a session on the other, and timid volumes compared to the two previous sessions of decline. In the end, a market plagued by multiple questions, which is trying to refine the schedules for rate hikes on both sides of the Atlantic, and which would clearly prefer a calm on the geopolitical side.
As a reminder, Thursday marked the end of a new Board of Governors of the powerful Frankfurt monetary institution.
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.”
This week, “investors’ attention will also be held by the USA/Russia conflict and the movements on the Ukrainian border, as well as by the pressure surrounding the English Prime Minister”, notes Vincent Boy, concerning other potential drivers of market, (geo)politics for their part.
In terms of statistics, the Sentix index of investor confidence in the Euro Zone rose more than expected, to 16.6 points. No sharp landmark from the United States came to animate the debates. However, the benchmarks are back on Tuesday (see below).
On the values ​​side, ArcelorMittal (+4.12% to 28.30 euros) ahead of its results on Thursday, dominated the CAC rankings while Midcap Partners deduced from the strong growth in customs flows on steel in the fourth quarter of 2021 that the consensus for sales projections will be clearly exceeded. Worldline takes 3.2% and Sanofi 3.1% after the approval of a new drug, the first available treatment for cold agglutinin disease. An encouraging signal for the pharmaceutical group which has made rare diseases one of its growth drivers. Airbus (+2.4%) and BNP Paribas (+2.2%) also posted solid growth.
Outside the flagship index, Faurecia nibbling 0.9% as the equipment manufacturer announced that it would adopt the Forvia name following the finalization of the acquisition of a majority stake in Hella. The group resulting from the merger becomes the world’s seventh largest automotive supplier.
On the other side of the Atlantic, the main equity indices ended in negative territory (at best balanced for the Dow Jones). The tech-heavy Nasdaq COmposite contracted 0.58% to 14,015 points and the S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.37% at 4,483 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 $1,1400. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $91.30.
To follow on the agenda this Tuesday, as a priority, the French trade balance at 8:45 a.m. and the American at 2:30 p.m. At 12:00 the NFIB indicator for small businesses will be published.
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 on Thursday, 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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