(News Bulletin 247) – The decline in long-term interest rates, particularly on the other side of the Atlantic, with the approach of nevertheless decisive benchmarks for inflation, will have made it possible to breathe some air into the equity markets, in particular for growth projects. The CAC 40 will have gained 1.46% to 7,130 points yesterday, in similar proportions to its first weighting, the emblematic LVMH growth record (+1.49% to 716.60 euros). Attention will focus Thursday on the interpretation of US inflation figures in the sense of consumer price indices. Verdict at 2:30 p.m.
“Things should get tough [ce] Thursday with the publication of consumer price indices (CPI) in the United States, which should once again show an acceleration in inflation,” warns Vincent Boy (IG Market). “A reading higher than expected could lead to further jolts in the market, as this could imply an even faster tightening of US monetary policy, especially after the NFPs last week, which came out in strong acceleration,” warns M Boy (IG France).
The challenge in the trading rooms is to revise downwards or upwards the degree of tightening to come from the Fed. And if necessary to anticipate, why not, a double increase (+50 bp) in federal rates from next month.
Be that as it may, for Vincent Manuel (Indosuez Wealth Management), “the reduction in the Fed’s balance sheet is probably a destabilizing element which can induce a higher volatility regime. Indeed, the central banks have bought massively, during months, securities on the market, which has helped to reduce market volatility. Investors must therefore take this new situation into account.”
On the values side, apart from Danone and Sanofi, companies with an eminently defensive character, all the other components of the three-color flagship index ended in the green on Wednesday. Cyclicals like URW (+4.9%) or automotive (+4% for Stellantis and +2.7% for Renault) as well as technology stocks (+3.8% for STMicro, +3.6% for Worldline, +3% for Capgemini) recorded the most pronounced gains. Among the main publications of the day, the European n°1 in asset management Amundi, a subsidiary of Crédit Agricole, announces that it exceeded 2 trillion in assets under management at the end of December, helped by the acquisition of Lyxor and the rebound of its business in Asia. In response, its price jumped 3.9%.
On the other side of the Atlantic, green dominated the chart on the eve of the highly anticipated publication of consumer price indices. The Dow Jones gained 0.86% to 35,768 points and the tech-heavy Nasdaq Composite gained 2.08% to 14,490 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, rose 1.45% to 4,587 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 $90.10.
On the statistical side, the US CPI box is checked in red on the investors’ diary. Verdict at 2:30 p.m., one hour before the opening of the debates on the shares. Two plates will be studied as usual: an enlarged basket, and a basket of products corrected for volatile elements (energy and food).
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, before starting to rise again.
FORECAST
In view of the key graphic 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 a crossing of 7390.00 points would revive the tension in the purchase. While a break of 6884.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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