CAC 40: A slightly less offensive bias before major meetings

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The CAC 40 index (+0.28% Monday at 7,956 points) continued in flat volumes, its lateral transition below the symbolic threshold of 8,000 points, with operators showing a wait-and-see attitude, without being tempted by profit-taking, as important deadlines approach this week: ECB Governing Council on Thursday and NFP report on American private employment on Friday. The Chairman of the American Federal Reserve (Fed), Jerome Powell, will also be heard by both houses of Congress this week.

“The ECB should not modify its monetary policy nor its APP and PEPP programs” anticipates Patrick Barbe, head of investment grade bond investing in Europe at Neuberger Berman, following the statements of ECB Vice President Luis de Guindos last week .

“The focus will be on the revised ECB staff forecast. The latter is expected to change significantly as it takes into account the faster-than-expected fall in inflation without pressure on energy prices over the winter. The economic outlook is expected to point to a period of sustained low growth. Given weak loan production and the housing downturn, rate forecasts can be expected to inflation for 2025 and 2026 are already very close to the ECB’s 2% target.”

To follow on Friday the statistical highlight of the week with the NFP (Non Farm Payrolls) report, federal report on the health of American private employment. Operators will not be monitoring the health of employment, which is undoubtedly very good, but the persistence of tensions, particularly wage tensions, which contribute to the resilience of the inflationary phenomenon that the Fed has been trying to contain for months.

New job offers, weekly registrations for unemployment benefits and the ADP survey will, on this point, punctuate the week, before the NFP on Friday. After more than 350,000 positions created in January in the private sector (excluding agriculture), the consensus does not exceed 200,000 for the month of February.

This is therefore a “test week” during which we will see if the ECB and the Fed are “comfortable” with the markets’ reading of the trajectory of inflation and future rate cuts. “, notes Alexandre Baradez, head of market analysis at IG France.

Yesterday, the Sentix investor confidence index in the Euro Zone rose slightly although in negative territory, at -10.5. For Nomura economists, although it is evolving positively, the Sentix survey remains below its long-term average. Nevertheless, it is moving in the right direction. In March, the current situation index and, more Still, the balance of expectations has improved. The balance of expectations is -2.3, just below the zero level, which is the dividing line between contraction and expansion. Meeting expectations is a promising sign that the euro zone could enter a recovery phase.”

On the values ​​side, up 7% at mid-session, OVHcloud limited its gains to 1.5% this Monday evening while Stifel revised its opinion on the file, moving from “hold” to “buy”, encouraged by the trajectory of improvement in the group’s margins. The consumer computer equipment specialist LDLC lost 2.4% after announcing Friday evening that it had been the victim of a computer attack. On the publications side, the results season will end this week on the CAC 40 with Thales, Teleperformance and Vivendi.

On the other side of the Atlantic, the main equity indices ended the first session of the week in the red, like the Dow Jones (-0.25%) and the Nasdaq Composite (-0.41). %) penalized by the decline of Apple after a fine imposed by Brussels. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.12% to 5,130 points.

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 $1.0850. 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 Tuesday, to follow as a priority this morning the final data of PMI services in the Euro Zone (February), and the American ISM Services 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. We will carefully monitor the possible formation of a gap of shortness of breath or exhaustion, in the next sessions, beyond 8,000 psychological points. Ultimately, breathing towards the orange trend line (mm50d) is the preferred option. The latter is currently gravitating towards 7,610 points.

FORECAST

Considering the key graphical 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 below resistance at 8000.00 points.

Hourly graph

Daily Data Chart