(News Bulletin 247) – While NATO is still demanding proof of a “massive” withdrawal of Russian troops to the Ukrainian border, and geopolitical tensions thus continue to exert strong pressure on energy prices, the markets remain on the defensive. Nevertheless, very reassuring signals on “real” consumption in the United States, and the deliberately cautious nature of the Fed in its “Minutes” have made it possible to limit the losses on the equity markets, on both sides of the Atlantic. The CAC 40, Thursday, will have lost only 0.21% to 6,964 points, in volumes in sharp decline.
Operators turned to American consumption on Wednesday, sacrosanct consumption which is the main driver of national wealth creation across the Atlantic. The subject is all the more sensitive as the latest publications from the University of Michigan on the morale of the American consumer have shown a real weakness in this regard. The score of 61.7 for this month, in preliminary data, is a low point since November 2011. It is for this reason that operators are eager to know the “real” consumption figures. However, retail sales for the month of January jumped 3.8% month-on-month, well above expectations…
Moreover, the federal report on industry in January largely beat expectations, both for the production dynamic itself (+1.4%) and the production capacity utilization rate (77.6% ).
Despite the tone of the “Minutes”, the now increasingly credible scenario of a 50 bp hike in federal rates (Fed Funds) from next month is taking shape. “Soaring inflation nevertheless increases the risk of a 50bp hike in the Federal Reserve’s key rates in March, in a context of generalized pressure on prices”, summarizes César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.
“The temporary energy price increases and the repercussions on the supply chain are taking longer than expected to fade,” notes Bénédicte Kukla, Senior Investment Officer at Indosuez Wealth Management. “Looking ahead, labor market tightness in some sectors is putting upward pressure on average hourly earnings (up 5.7% year on year in January, the highest rate for 15 years) and increase the risk of long-lasting inflation.”
On the values side, within the CAC 40, only Unibail-Rodamco-Westfield (+4.54% to 72 euros) and ArcelorMittal (+3.20% to 27.775 euros) were ahead of Air Liquide, whose price took 2.7 % after the publication of annual results above expectations. Outside the flagship index, it is FDJ which has particularly shone thanks to the raising of its 2025 ambitions, set during its IPO. After taking more than 7% in the morning, the title is nevertheless content with a gain of 3% at the close.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in scattered order, a good distance from their respective session lows. The Dow Jones contracted by 0.16% to 34,934 points and the Nasdaq Composite by 0.11% to 14,124 points, while the S&P500, benchmark barometer of risk appetite in the eyes of managers of funds, managed to climb into the green (+0.09% to 4,475 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 as a priority, on the agenda this Thursday, the weekly registrations for unemployment benefits and the manufacturing index Philly Fed at 2:30 p.m.
KEY GRAPHIC ELEMENTS
An oblique line of support gave way on Monday 02/14 under the sectorally federated assaults of the selling side, 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. . Entry into bear market is not formally characterized, but the situation calls for the greatest vigilance under this oblique. She was reinstated at the very end of the week. We put her under close surveillance. In the immediate future, drawing a bevel (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, in the form of a pullback of school.
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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