CAC 40: The calm on employment reassures, the decline in oil prices worries

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This week is particularly rich in publications – no less than 5! – on the American employment front. And the first two, published in the first part of the week, namely the new job offers and the ADP survey, showed a notable drop in tensions on private employment. We are therefore carefully following the other 3, namely the weekly registrations for unemployment benefits and job cuts (Challenger) this Thursday and above all, as a highlight, the federal NFP (Non Farm Payrolls) report on private employment in November, excluding agriculture.

This ebbing of tensions calls for a less muscular speech than expected at the end, on December 13, of the Fed’s last FOMC. Combined with the confirmation of a slowdown in price dynamics, this softening of the employment landscape suggests in any case that the peak on Fed Funds has definitely been reached.

Published yesterday, therefore, this investigation by the private human resources firm ADP showed stable job creation in the private sector (excluding agriculture), slightly above the 100,000 mark. Which would suggest that employment tensions are subsiding, leaving room for the American Federal Reserve (Fed) to maintain its key rates before reducing them. However, these data constitute only an imperfect prelude to the official figures which will be published Friday afternoon.

On the value side, automobiles were in great shape. Renault posted the biggest increase in the CAC 40 (+5.9%), and Stellantis gained 2.9%. Automotive equipment was dragged in this wake, like Valeo (+3.63%). Rémy Cointreau lost 1.6% while bank UBS lowered its advice from “buy” to “neutral”. On the smaller value side, Catana fell 8% after publishing significantly lower profitability over its entire 2022-2023 financial year, due to inflation and logistical concerns.

On the other side of the Atlantic, the main equity indices ended in negative territory, under the effect of some profit-taking, catalyzed by the decline in crude oil prices. The Dow Jones lost 0.19% to 36,054 points and the Nasdaq Composite lost 0.58% to 14,146 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 $1.0770. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $69.60.

On the agenda this Thursday, revised Q3 GDP data in the Euro Zone at 11:00 a.m., job cuts in the United States at 1:30 p.m., followed by weekly registrations for unemployment benefits at 2:30 p.m., expected at 221,000 new registrations.

KEY GRAPHIC ELEMENTS

The CAC ended up completely filling the gap of September 18, crossing it, without reversing the trend at the time of its filling. Volumes yesterday were slightly higher than those observed the day before, supporting the idea of ​​a recovery at this stage, rather than a clear ebb. However, a rapid return to 7,200 points is not excluded, with a participation in the decline of the values ​​which participated the most in the autumn rally.

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 7500.00 points.

Hourly graph

Daily Data Chart