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The CAC 40 index, well helped by CapGemini and Thalès, managed to regain a good part of the ground lost the day before following the publication of American inflation which is certainly slowing, but less sharply than anticipated. The index gained 0.68% to 7,677 points.
“The US inflation figures are very bad. Total inflation is slowing less than expected and remains above 3%, because underlying inflation is stagnating close to 4%, twice above the target of the Fed (American Federal Reserve). In addition, inflation is accelerating sequentially (from one month to the next, Editor’s note) and the increase in prices comes from the least volatile categories (housing and services excluding housing) “, develops Xavier Chapard of LBPM.
As a reminder, prices across the Atlantic, food and energy included, increased at an annual rate of 3.1%, i.e. a much less significant slowdown in inflation than the target, at 2.9%, suggested. Enough to further reduce hopes of cumulative declines in Fed Funds yields over the year 2024. The firmness (understanding the persistent tensions) on the job market, as well as the thorny issue of rents (they are part of the calculation methodology) largely explain these worrying figures. So-called core inflation, which excludes volatile food and energy prices, remains stable at 3.9% over one year, where the consensus compiled by the Wall Street Journal also counted on a weaker progression, of 3.7%.
No surprises yesterday morning regarding the first estimates of Q4 GDP in the Euro Zone, stable from one quarter to the next, perfectly in line with expectations.
Capgemini signed the hit of the day with an increase of 6.7%. The group published better than expected growth and above all indicated that it expected an improvement in its dynamics from the second quarter of 2024. The cement specialist Vicat was the second star of the day (+4.2%) benefiting from a good publication on its 2023 results, certainly helped by a lenient basis of comparison.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session up, like the Dow Jones (+0.40%) and the Nasdaq Composite (+1.30%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.96% over 5,000 points overall.
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 $1.0710. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.60.
On the agenda this Thursday, to follow in priority a speech by C Lagarde at 9:00 a.m. and across the Atlantic, retail sales the Empire State index and weekly registrations for unemployment benefits at 2:30 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 and Publicis).
A first divergence between price and RSI, between the last two high points (14/12 and 31/01) becomes clear.
Furthermore, a resistance zone is gradually building on the historic highs, in the form of a double peak below 7,700 points. All in modest volumes.
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 7700.00 points would revive the buying tension. While a break of 7406.00 points would restart the selling pressure.
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