CAC 40: Last session of an exceptional 2023 vintage

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Some occasional profit-taking, and the decline of TotalEnergies (-1.70%) alone caused the CAC to stall for the penultimate session of the year (-0.48% to 7,535 points). The flagship Parisian index should, in a famished level of activity, end an exceptional 2023 vintage in calm. The tricolor index currently displays a positive annual balance sheet of +16.40%, a balance sheet which is embellished in the latter part of the year with the increasingly clear prospect of seeing the major central banks loosen the monetary tap as soon as 2024. In particular, the Fed could even make its first rate cut as early as March; In any case, this is what clearly emerges from the CME’s FedWatch tool, since the publication last week of signals of a slowdown in the economy… and inflation!

“No false notes from the United States with macroeconomic data which still supports the ideal scenario of a soft landing for growth,” notes Romane Ballin, bond manager at Auris Gestion.

Published on Friday, the PCE price index, the most followed by the American Federal Reserve (Fed), fell against all expectations by 0.1% in November. On an annual basis, the increase is limited to 2.6% year-on-year in November, compared to 2.9% the previous month. Excluding volatile elements such as energy and food, the basic “core PCE” inflation index stands at 3.2%, against a consensus of 3.3% and after 3.4% in October.

“If the change over one year (3.2%) remains higher than the Fed’s 2% target due to base effects, inflation over the last half-year has returned to the pace that the central bank wishes to achieve” , notes Enguerrand Artaz, Global allocation fund manager at La Financière de l’Echiquier.

“While at the same time the turnaround in the job market is confirmed and the “red flags” are multiplying on growth prospects, the Fed no longer has any reason not to quickly lower its rates. A first cut in March becomes a very credible scenario.”

The day before, growth was revised significantly downward to 4.9% at an annualized rate, compared to 5.2% for previous estimates. Enough to fuel the scenario of a more lenient Fed, consistent with the tone adopted by J Powell at the end of the last FOMC of the year.

In terms of statistics on Thursday, weekly registrations for unemployment benefits have just increased slightly to 218,000 new units, without moving significantly away from the target. Current home sales stagnated in November, where the consensus was for a significant increase.

On the value side, mainly note the drop in (para)oil files against a backdrop of decline in crude oil, such as Schlumberger (-1.08%), Vallourec (-1.18%), Technip (-1.53). %), and TotalEnergies (-1.70%). “As oil tankers … have resumed their crossings of the Suez Canal and the Red Sea, thanks to the reassuring presence of a US-led maritime team in the region, this has helped to allay some immediate concerns regarding supply issues,” explains Susannah Streeter, analyst at Hargreaves Lansdown, quoted by AFP.

On the other side of the Atlantic, the main equity indices experienced a very calm session, with closes close to equilibrium like the Dow Jones (+0.14% to 37,710 points) or the Nasdaq Composite (-0.03% to 15,095 points). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, symbolically gained 0.04% to 4,783 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 $1.1070. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $72.00.

On the agenda this Friday, to follow in priority the Chicago manufacturing PMI index at 3:45 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. In the immediate future, it is a healthy wedge consolidation (wedge) which is taking shape. An exit from the top, subject to an acceleration in transaction volumes, would announce the formation of a final bullish leg before a long breather in prices.

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 7585.00 points would revive the buying tension. While a break of 7406.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart