CAC 40: 8,000 points, that’s it!

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The psychological threshold of 8,000 was conquered yesterday, and preserved in closing data (+0.77% at 8,016 points), in the wake of a Council of Governors of the ECB. If a status quo on rates has been confirmed (4.50%, 4.00% for the deposit rate), several elements have more to the market. The ECB lowered its inflation forecast to 2.3% for 2024 compared to 2.7% previously anticipated. And for 2025, the ECB now expects inflation to reach its target of 2%. GDP growth should reach 0.6% in 2024 compared to 0.8% forecast in December, again according to the ECB.

“As expected, the ECB kept its policy unchanged and reiterated its data-driven approach set out following the January meeting, namely that the central bank needs to see more evidence of a sustainable return to inflation towards its target before it can start lowering rates”, notes Whitney Watson, Co-Head & Co-CIO, Fixed Income & Liquidity Solutions, Goldman Sachs Asset Management following the ECB’s statements.

“Despite the downward revision of growth and inflation, the ECB noted that domestic price pressures remain high, partly due to strong wage growth. Therefore, we expect the ECB to begin to cut rates starting in June, for a total of four 25 basis point cuts this year. Although risks have become more balanced, larger or faster cuts could materialize if disinflation accelerates or if the economy was falling into recession.”

Yesterday, the Chairman of the Fed was again interviewed in Congress, this time before the Senators, and his statements were likely to encourage risk-taking on the financial markets: According to J Powell, the American central bank does not is no longer very far from confidently basing itself on a scenario of inflation falling towards the 2% target to consider an initial rate cut.

Operators will be able to look ahead to the publication this Friday of the NFP (Non Farm Payrolls) report on the state of health of American employment. 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. The Fed will be sensitive to any confirmation of tensions on private employment, after confirmation, by the PCEs last week, that the return to the inflation target is not a linear path… As a preview, this week, currency traders learned of new job offers (JOLTS), the results of the survey by the private human resources firm ADP, and weekly registrations for unemployment benefits. All these indicators, reassuringly, were quite in line with expectations.

On the values ​​side, the stock market nightmare continues for Teleperformance. The action fell by more than 23% after revealing growth below expectations for the fourth quarter and a disappointing margin forecast for 2024. JCDecaux dropped 9.1%, after disappointing its annual results and announcing outlook a bit below expectations for its first quarter revenues. Spie jumped 6.4% driven by 2023 results deemed “robust” by Jefferies. The multi-technical service provider has in fact achieved its margin objective two years in advance.

On the other side of the Atlantic, the main equity indices ended Thursday’s session in the green, although in very different proportions, like the Dow Jones (+0.34% to 38,791 points) and the Nasdaq Composite (+1.51% to 16,273 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.03% to 5,157 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 $1.0940. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $79.50.

On the agenda this Friday to follow in priority at 2:30 p.m. the NFP (Non Farm Payrolls) report on the health of private employment in the United States.

KEY GRAPHIC ELEMENTS

For the first time in its history, the flagship French index has crossed the symbolic bar of 8,000 points. If the exploit were validated in weekly data – we will have confirmation or denial at the close this Friday – and subject to maintaining volumes at a sufficient level, a new bullish leg would develop.

FORECAST

Considering the key graphical factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.

This bullish scenario is valid as long as the CAC 40 index is above support at 8000.00 points.

Hourly graph

Daily Data Chart