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The CAC 40 index showed a first sign of running out of steam since the start of its autumn rally, yesterday tracing a candle (shadows included) within the body of the previous candle. And this on the eve of the highly anticipated publication of the monthly report on American employment. This NFP (Non Farm Payrolls) will constitute for the Fed, and therefore for investors, a benchmark of choice to measure the ebb of tensions on the private employment market. The greater this ebb, the less the Fed will strengthen its speech at the end of the last FOMC of the year on December 13.
For the moment, the various indicators on employment which punctuated the week, first and foremost the survey by the private firm ADP and new job offers (JOLTS) have sent satisfactory signals. Note, however, that weekly registrations for unemployment benefits, published yesterday, still remain close to the threshold of 200,000 units. Investors therefore want certainty.
The news was dominated by Asia. The Bank of Japan (BoJ) has been making headlines. Comments “from officials at the Bank of Japan have suddenly led investors to increase the chances that the BoJ will end its negative interest rate policy”, underlines Deutsche Bank. In addition, China’s foreign trade figures are disappointing. Imports contracted in November, by 0.6% year-on-year, while analysts polled by Bloomberg expected an increase of 3.7%.
On the value side, Air France-KLM dropped 3.1%, penalized by a lowering of recommendation from JPMorgan to “underweight”. Sanofi lost 1.2% at the end of a day dedicated to R&D where the group highlighted its portfolio of drug candidates and their potential markets. Vallourec (-2.80%) and Schlulmberger (-2.42%) remained under pressure due to the continued decline in crude oil prices.
On the other side of the Atlantic, the confirmation of the decline in 10-year Treasuries will have particularly benefited the Nasdaq Composite (+1.37% to 14,340 points), as will the presentation of new products by Alphabet and AMD. The Dow Jones (+0.17% to 36,117 points) and the S&P500 (+0.80% to 4,585 points) also finished in the green, to a lesser extent.
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 $1.0780. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $70.70.
On the agenda this Friday, to follow in priority the Non Farm Payrolls report for the month of November.
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 identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that crossing 7500.00 points would revive the buying tension. While a break of 7200.00 points would restart the selling pressure.
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