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The rather accommodating tone adopted on Wednesday by Powell at the end of the FOMC will have supported a Parisian market barely slowed down by the much more cautious provisions of C Lagarde at the end of his Board of Governors the next day. In the end, over the whole week, the flagship Parisian index will have gained 0.93% and reached new zeniths (7,654 points).
More restraint is expected for the start of the week: “the markets have moved very (too?) quickly from the phase of estimating the terminal rate for the Fed and the ECB, to the phase where the first rate cuts are aggressively ” prices”…perhaps forgetting in passing the notion of “higher for longer” regularly put forward by Christine Lagarde or Jerome Powell.” for Alexandre Baradez (IG France). “This phase of a long plateau on rates is necessary to rule out any suggestion of a resumption of inflation or quite simply to ensure that inflation converges sustainably with the 2% objective.”
The statements of the president of the New York Fed should also have weight. The latter declared that the members of the monetary policy committee were not, for the moment, “really talking about rate cuts at the moment”, on the show Squawk Box of CNBC.
“We are very focused on the question before us, which is, as Chairman Powell said, whether monetary policy is tight enough to get inflation back to 2%. That is the question at hand. to us,” he said. These statements therefore contradict the words of Jerome Powell, who admitted on Wednesday evening that members of the Fed had discussed rate cuts.
In terms of statistics on Friday, the PMI activity indicators, as a first estimate for the current month, attracted attention. If the score, on the scale of the Euro Zone as a whole, is close to expectations for industry (44.2) in the absence of a bad German surprise, the score for services is however below the consensus, at 48.1. The Composite index fell from 47.6 in November to 47.0 in December, highlighting a decline in private business activity in the region for a seventh consecutive month. Excluding the first months of health confinement in 2020, the euro zone recorded its strongest quarterly contraction since the fourth quarter of 2012.
On the corporate front, Atos rebounded by 20.5% after Airbus showed interest in the group’s cybersecurity division with a view to its takeover, according to information from Le Figaro. STMicroelectronics increased by 2.7%, supported by UBS which returned to purchasing the stock for the first time since 2020. The Swiss bank judges that the transformation of the Franco-Italian group is “undervalued”. On the small and mid-cap side, Chargeurs soared by 30.7% to match the price of the takeover bid launched by its director Michaël Fribourg.
On the other side of the Atlantic, the main equity indices managed to gain a few points, with the exception of the S&P500, which remained perfectly stable. The Dow Jones gained 0.15% on Friday to 37,305 points and the Nasdaq Composite gained 0.35% to 14,813 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 $1.0920. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $72.50.
On the agenda this Monday, follow the NAHB index of the American residential market at 4:00 p.m.
KEY GRAPHIC ELEMENTS
The creation of new zeniths on the CAC, the high point of the autumn rally, will have crowned a remarkable federalization movement. The first signs of the need for breathing have nevertheless appeared since Thursday, precisely since these new records were set. Neutral opinion proposed at the start of the week due to the divergence observed between price and RSI in hourly view. .
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 8000.00 points would revive the buying tension. While a break of 7406.00 points would restart the selling pressure.
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