CAC 40: Warm under 8,000 before PCE prices

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After the NVidia frenzy, in complete serenity, the CAC activated the “consolidation” mode below the symbolic threshold of 8,000 points, awaiting American inflation figures – PCE prices, the Fed’s favorite measure in its inflation assessment, will be published tomorrow. In the meantime, the flagship Parisian index moved on Tuesday within narrow margins (+0.23% to 7,948 points), in a meager level of participation. On the values ​​side, it was the big gap between Eurofins Sc (-6.65%) and Bouygues (+8.00%), in the wake of their respective quarterly publications.

We will also note the variation of Casino (+43.3%) which does not necessarily mean much given the group’s now very thin capitalization (73 million euros) and its nominal “penny stock”. The commercial court validated Monday evening the financial restructuring of the group and its takeover by Czech billionaire Daniel Kretinsky. In a press release, Rallye, the future former parent company of Casino, recalled that once this restructuring was completed it would lose control of the group, holding only 0.1% of the capital. The consequence is that Rallye’s unsecured debt will become payable by its creditors, and the group will then find itself in suspension of payments. Rallye indicated that it would request the opening of judicial liquidation proceedings.

In the East of the financial world, “China has intensified its efforts to support its stock market but also save a real estate sector at half mast, where demand for credit has still not seen a rebound” notes Romane Balin, bond manager of Auris Management. “The authorities have thus tightened the rules on short sales while the central bank has decided to relax its monetary policy more significantly by lowering the 5-year credit rate (reference rate for mortgage loans) from 25 bp to 3.95%. While this news was well received by the market, further measures will surely be necessary to sustainably restore investor confidence. It should be noted that the rebound that began before the Chinese New Year public holiday break seems to be confirmed, thus deserving a closer look.”

In terms of statistics, operators took note of the consumer confidence index (Conference Board), in surprise contraction to 106.7. But as currently “Bad news is good news”, just like “Good news is good news”, the stock markets across the Atlantic have hardly reacted. The Dow Jones contracted symbolically by 0.25% and the stainless Nasdaq Composite gained 0.37%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.17%.

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 $1.0820. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.20.

On the agenda this Wednesday, to follow in priority the preliminary data of the American GDP Q4 at 2:30 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. We will carefully monitor the possible formation of a gap of shortness of breath or exhaustion in the next sessions.

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