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Between the recording of new zeniths and the decline of prices, the CAC 40 will have experienced an intense week, subject to a number of benchmarks, both on the monetary, macro and microeconomic levels. The week ended with the release of a very strong federal employment report. So solid that it was enough to instill doubt in the minds of operators, who continue to push back their calendar expectations for a first rate cut.
This publication on the health of private employment (excluding the agricultural sector), always closely monitored by the Fed, once again shows a particularly strong resilience of the world’s largest economy. The content of the report, which exceeds expectations on all sub-indicators, fully confirms the directions chosen by the Federal Reserve earlier in the week, at the end of its FOMC. The market is getting used to the idea of ​​a first rate cut being postponed until the second half of the year.
In detail, the unemployment rate, expected to rise to 3.8%, ultimately remains stable at 3.7% of the active population. Problematic for inflation, the average hourly wage accelerates upwards (+0.6% against a target of +0.3%), and above all, job creations jump, to more than 350,000 in the month of January !
Faced with this major surprise, rate cut expectations (via Futures Fed Funds) for the March meeting fell below 20% while they continued to fluctuate around 50% on Thursday, the day after the Fed meeting.
On the values ​​side, Vallourec gained 3.10% after announcing that its annual results would be higher than its forecasts.
On the other side of the week, the main equity indices ended Friday’s session with very different performances, such as the Dow Jones (+0.35%) and the Nasdaq Composite (+1.74%). ), worn by 2 of the Magnificent 7.
On the corporate publications side, Amazon (+7.87%) and MetaPlatforms (+20.32%), which published Thursday after the market, were popular. Meta reported strong revenue growth and announced a dividend for the first time in its history, while Amazon beat expectations and delivered optimistic guidance for the first quarter. Conversely, Apple (-0.54%), despite a return to growth, is not convincing. The Apple group published revenues lower than analysts’ expectations in China and delivered cautious outlooks for the current quarter. Which relegates good results to the background.
Earlier in the week, two disappointments to note among the Magnificent Seven caused the market to correct: to varying degrees, Microsoft (-2.69%) and Alphabet (-7.35%) had the bitter experience of greed, highly legitimate, of shareholders on these valuation levels.
The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, managed to gain 1.07% to 4,958 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 $1.0770. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $72.40.
On the agenda this Monday, the final services PMI data in the Euro Zone at 10:00 a.m., and the American ISM services PMI at 4:00 p.m.
KEY GRAPHIC ELEMENTS
The bevel (wedge) which had predominated until then was broken in its momentum by the formation of a large gap and an increase in gains during the session itself on Friday January 26. A major challenge now awaits the CAC: the creation of a series of absolute records. To do this, the participation of the luxury and spirits sectors alone would be insufficient.
In the immediate future, taking a breather from the lessons is the preferred option during this last part of the week. With a close eye on the stocks that have climbed the most since mid-January. (LVMH, Hermès, Teleperformance, CapGemini, Safran or Publicis).
FORECAST
Considering the key graphical factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.
This bearish scenario is valid as long as the CAC 40 index is below resistance at 7695.00 points.
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