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It holds! Close to its zeniths, the CAC 40 is digesting the messages sent by central banks last week, messages showing a change in the communication of the Fed and the ECB. The CAC 40 ended on a stable note, but symbolically in the green on Tuesday (+0.08% to 7,574 points), in particular thanks to LVMH (+0.50%) which outperformed other luxury players on the flagship index.
“The Fed made a significant change in communication by indicating that the possibility of rate cuts had been discussed. This appears premature given the resilience of growth, a robust job market and the inflation still high”, judge the OSTRUM AM strategists.
“The ECB, for its part, remained cautious due to the strong increase in unit labor costs. It is awaiting data from the first half of 2024 to judge the evolution of salaries,” they continue before concluding that “a divergence major change has thus taken place between the Fed and the ECB. Despite the ECB’s efforts to contain market expectations, the latter have retained the significant change in communication from the Fed and anticipate rate cuts that are still too aggressive.”
Not much to get your teeth into yesterday on the statistical side. Prices in the Euro Zone in November have just been confirmed in final data by EuroStat. Excluding food, energy, alcohol and tobacco, prices increased by 3.6% at an annualized rate.
On the values side, Virbac ended the day up sharply by 12%, after once again raising its objectives for the 2023 financial year. Sodexo fell by 0.7% while the company announced the separate listing of its subsidiary Pluxee on February 1 on the Paris Stock Exchange. Legrand lost 1.8% while UBS went from “buy” to “sell” on the stock. The Swiss bank perceives risks linked to the economic situation for the company and judges that the market overestimates its growth potential.
On the other side of the Atlantic, the main equity indices continued their upward movement, like the Dow Jones (+0.68% to 37,557 points) or the Nasdaq Composite (+0.66% to beyond the symbolic 15,000 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.59% to 4,768 points.
An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0960. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $74.00.
On the agenda this Wednesday, to follow in priority the American consumer confidence index (Conference Board) 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 federation 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 1.10 points would revive the buying tension. While a break of 1.07 points would restart the selling pressure.
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