CAC 40: Without Wall Street, the opportunity to consolidate recent gains

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The CAC 40 index continued its foray into uncharted territory on Friday, in a band between 7,700 points and the highly symbolic threshold of 8,000 points, in a market which has fully digested the idea that it would be necessary to wait before witnessing to an initial reduction in federal rates. The publications of consumer prices on Tuesday and producer prices on Friday, showing signs of warming up, clearly argued in this direction.

Enough to further reduce hopes of cumulative declines in Fed Funds yields over the year 2024. And on the bond markets, the reaction was immediate, the yield on the 10-year American bond rose significantly to 4 .30% compared to 4.23% the day before.

“The surge in US long-term rates following higher-than-expected inflation is then temporarily limited by disappointment in retail sales. Ultimately, the 10-year rate gains ≈ 15 basis points (bps) to around 4.3% in the United States, without any notable repercussions in Germany where it is around ≈ 2.4% or in France at ≈ 2.9%. American and Eurozone stocks are posting record highs, driven by financial stocks and cyclical stocks that the results season favors recently”, summarizes Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM.

In terms of statistics, producer prices* increased more than expected, by 0.3%, compared to a more modest increase of 0.1% expected by the market. Prices are therefore rising again over one month, after having fallen by 0.1% in December. Over one year, they increased by 0.9% against +0.6% expected by the consensus. On Tuesday, prices, but this time on the consumer side, had already tensed up the markets. The latter appreciated at an annual rate of 3.1%, a slowdown in inflation that was much less significant than market expectations, at 2.9%. Meanwhile, American household morale increased in February. The University of Michigan confidence index increased by 0.6 points over one month, to 79.6, its highest since July 2021.

On the value side, EssilorLuxottica lost 0.4%, suffering from a lowering of Stifel’s recommendation to “hold” compared to “buy” previously. Outside the CAC 40, TF1 was the star of the day (+6.8%). The media group certainly published its results Thursday morning. But several research offices revised their targets upwards this Friday and appreciated the company’s very promising ambitions in streaming, via the TF1+ platform.

On the other side of the Atlantic, the main equity indices ended Friday’s session in the red, in the form of healthy breathing for the Dow Jones (-0.37%) and for the Nasdaq Composite ( -0.82%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, managed to preserve the psychological threshold of 5,000 points (-0.48% to 5,005 points).

On the agenda this Monday, nothing substantial to get your teeth into, especially since the American markets will remain closed due to a public holiday.

* Note that these PPI constitute a part of the PCE, the Fed’s preferred measure in its assessment of inflationary dynamics.

KEY GRAPHIC ELEMENTS

The index crossed 7,700 points on gap and entered an unexplored navigation zone between 7,700 and the symbolic threshold of 8,000 points. The oscillatory RSI (relative strength index) is recovering, suggesting a final bullish surge before consolidation that can be broken down into several legs.

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 8000.00 points would revive the buying tension. While a break of 7700.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart