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The CAC 40 (+0.15% to 8,028 points) digested above the 8,000 point mark on Friday the ECB Governing Council, concluded the day before. If the powerful Frankfurt monetary institution has, as expected, validated the status quo on rates (4.50%, 4.00% for the deposit), the comments accompanying the meeting satisfied the financial community.
“The downward revision of its economic outlook was the key information of the meeting […] of the ECB, because its long-term inflation forecast reaches its target of 2%, which means that the ECB can start to lower its key rates”, for Patrick Barbe, Head of European Investment Grade Fixed Income at Neuberger Berman. “Nevertheless, Ms. Lagarde explained that more information was needed because she is not yet “sufficiently confident” about progress in reducing inflation.”
The door is therefore open for June, while keeping a close eye on the evolution of salaries.
[Mme Lagarde] “remains particularly vigilant on the evolution of wages and corporate profits and will know a little more in April, but much more in June. Surprisingly, it downplayed the fact that its monetary policy is “dependent on data”, which means that the conditions for reducing rates are already in place, which implies that the market should react positively, with lower rates as well as credit spreads.
The flagship French index should begin the first session of the week on a cautious note, in the wake of Wall Street, and some profit-taking on the semiconductor giants. Legitimate profit taking in view of the initial progress.
Friday’s session was marked by the publication of the NFP report on American private employment. If the unemployment rate climbs from 3.7% to 3.9% of the active population, job creations in the private sector have clearly exceeded expectations, coming to 275,000. On the other hand, the extreme moderation of the The increase in wages is clearly likely to reassure the financial community.
The day before, the head of the Fed told a committee of senators that the American central bank was thinking of lowering its rates this year, even if it needs more evidence showing that inflation is falling. According to J Powell, the American central bank 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.
On the values side, Vivendi lost 2.3%, showing the biggest drop in the CAC 40 after reporting annual results in line with expectations. But the company hasn’t given many more details about its proposed split. Excluding the flagship index, Stef jumped 10.1% as the cold logistics specialist improved its profitability in 2023. Rubis gained 7.20% after the group revealed 2023 results “well above expectations” , according to Oddo BHF. Fnac Darty suffered the blow (-3.9%), sanctioned after its future eviction from the SBF 120, on March 18. Just like Voltalia (-9.5%) which will suffer the same stock market fate.
On the other side of the Atlantic, it was the technological side of the stock market, or more particularly the semiconductor sector, which gave a red color to the last session of the week. If the Dow Jones contracted 0.18% to 38,722 points, the Nasdaq Composite lost 1.16% to 16,085 points. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, fell by 0.65% to 5,123 points.
An update on other risky asset classes: around 8 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 $77.30.
On the agenda this Monday, the monthly meeting of the Eurogroup, all the ministers of economy and finance of the Euro Zone.
KEY GRAPHIC ELEMENTS
The passing of the symbolic 8,000 points, as significant as it was, was not followed the next day by a bullish extension, and the volumes were relatively timid. The option of consolidation under these recent zeniths remains relevant, without in any way calling into question or doubting the power of trend initial.
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.
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