CAC 40: Real start of the week!

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In the absence of a benchmark from Wall Street, which remained closed due to a public holiday (commemoration of all former presidents of the United States), the Parisian market will have consolidated on Monday, finishing perfectly stable at 7,768 points, after having spent the entire session in light red territory. Operators have now digested the idea that the first cut in federal rates would not occur in the short term, and that the cumulative extent of the cuts over the year 2024 would not be as strong as hoped. This is due to the return to the inflation target, which is far from being a smooth river, as illustrated last week by the various statistics on the subject.

Published on Friday, producer prices increased more than expected, by 0.3%, against 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%.

On the values ​​side, it was Thales which suffered the biggest drop in the CAC 40 (-4.7%), the group suffering from a deterioration on the part of UBS which went to “sell” on the file against ” neutral” previously. The Swiss bank is indeed worried about the defense group’s prospects in space and digital security.

Excluding the flagship index, Forvia accentuated its decline to 12.7% after delivering its results for 2023 and announcing up to 10,000 job cuts over five years in Europe to restore its profitability. The outlook communicated for 2024 may have disappointed the market, particularly the debt reduction target.

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 $1.0710. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.30.

On the agenda this Tuesday, to follow as a priority the index of leading indicators at 4:00 p.m.

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