(News Bulletin 247) – The withdrawal of part of the Russian troops to the Ukrainian border will have encouraged yesterday a rebound in protest, the CAC 40 taking over the whole session 1.86% to 6,979 points. Technically, this corresponds to an almost complete filling of the immense bearish gap left gaping at the opening on Monday.
Tuesday marked the return of statistics, with a dense program. RAS concerning the first estimates of quarterly GDP in the Euro Zone (+0.3% for Q4 from one quarter to the next), with no deviation from the consensus. On the other hand, the targets have been missed for the ZEW index of confidence in the German economy (54.3) and for the December trade deficit (-9.7 billion euros).
“Germany’s economic outlook continues to improve in February despite growing economic and political uncertainties. Financial market experts expect an easing of pandemic-related restrictions and an economic recovery in the first half of 2022. They still expect inflation to come down, albeit at a slower pace and from a higher level than in previous months, so more than 50% of experts now expect inflation rates to fall. ‘Short-term interest in the Eurozone will increase over the next six months,’ commented ZEW Chairman Professor Achim Wambach.
Across the Atlantic, while the producer price index (PPI excluding food and energy) came out above expectations, confirming the idea of inflation setting in, the New York Fed’s manufacturing index (so-called Empire State index) completely missed the mark, at 3.1.
On the values side, noteworthy increases for Renault (+5.5%), Stellantis (+4.1%) or Alstom (+2%), which were among the strongest declines on Monday. BNP Paribas also jumped 2.9%, while the group could sell its private bank in Spain to Banca March, according to the economic publication Expansión. On the luxury side, Hermès interrupts with panache (+5.4%) its important downward sequence, while LVMH takes up 3.1%. Michelin fell 3.5% following its quarterly publication: the tire manufacturer reported higher-than-expected revenues and said it expected its net profit to exceed its pre-pandemic level in 2022. , but its operating margin rate somewhat disappointed operators.
On the other side of the Atlantic, the main equity indices have regained height, like the Dow Jones (+1.22% to 34,988 points) and especially the Nasdaq Composite (+2.53% at 14,139 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.58% to 4,471 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 $1.1370. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $92.30.
To follow in priority, on the agenda this Wednesday, industrial production in the Euro Zone at 11:00 a.m., and in the United States at 3:15 p.m. A cpcher in red on the agenda at 2:30 p.m. retail sales in the United States at 2:30 p.m. Actual level of consumption which will be monitored all the more since the latest studies by the University of Michigan on consumer confidence have been particularly disappointing. “Consumerism is the backbone of the US economy and therefore the evolution of consumer sentiment and purchasing behavior are under scrutiny, both by policy makers and financial markets.” summarizes Alexandre Baradez (IG France).
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. A definitive exit from the bottom of this bevel is the preferred option. The break, on a very wide gap on Monday, is a first decisive step. This gap was almost entirely filled on Tuesday.
FORECAST
In view of the key graphic 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 trading below the resistance at 7120.00 points.
Hourly data chart
Chart in daily data
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