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Patiently awaiting validation from Wall Street, the CAC 40 (+0.84% to 8,087 points) increased its height above the symbolic threshold of 8,000 points, the consumer price indices slightly above expectations that had no untoward consequences.
The main statistical event on Tuesday was indeed American inflation in the sense of the CPI (or CPI depending on the language used…). Without destabilizing the market, prices increased slightly more than expected. In particular, excluding food and energy, elements considered volatile, prices increased by 0.4%, compared to 0.3%. Not enough to revolutionize the estimated timetable for lowering federal rates. Over one year, the core index increased by 3.8% after an increase of 3.9% in January. The target (the consensus) was 3.7%.
It should be noted that a very specific element of the publication found a favorable response among investors. “The most important element of this report focused on the ‘housing’ component, which has received a lot of attention over the past month. On this level, the CPI is reassuring and housing should clearly contribute to disinflation over the coming months “, indicates Bastien Drut, head of Strategy and Economic Studies at CPRAM.
The CME’s FedWatch tool puts the probability of a rate cut at 70.7% following the FOMC on June 11 and 12. The markets continue to digest the moderately dovish tone adopted by J Powell, the head of the Fed at the end of the last Monetary Policy Committee, as well as the biannual hearings before Parliamentarians.
“The markets are now anticipating a rate cut at the June 12 meeting,” says Thomas Gicquel, Head of Bond Management, Indosuez Wealth Management. “In view of the American presidential elections on November 5, the FED’s action schedule should be limited to a single intervention before the summer. The July 31 meeting is being held between the Republican convention (mid-July) and the Democratic convention (mid-August). In order to remain neutral in the political debate, the FED should no longer act until November.”
“The amplitude of the drop should be limited to 25 bps, accompanied by a positive speech on the American economy, in order to avoid an effect of doubt on the markets,” anticipates M Gicquel.
The real compass of the market is in fact called NVidia, naturally, and the market will have appreciated that the favorite stock of American individual investors, which overtook Tesla in this competition, is regaining some color after two correction sessions.
On the value side, Wordline and Soitec, two tech companies that had been shaken the day before, recovered on Tuesday, with respective increases of 2.99% and 2.08%. Affluent Medical jumped more than 13% after announcing the success of the first implantation in humans of its Artus artificial sphincter for the treatment of stress urinary incontinence.
On the other side of the Atlantic, the main equity indices continued their irresistible rise, like the Dow Jones (+0.61%) but especially the Nasdaq Composite (+1.54%), with strong technological coloring. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.12%, now exceeding the symbolic threshold of 5,000 points by 175 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 $1.0930. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.80.
On the agenda this Wednesday, closely follow industrial production in the Euro Zone at 11:00 a.m.
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.
For the moment, the reading in Japanese candlesticks gives us
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 9000.00 points would revive the buying tension. While a break of 8000.00 points would restart the selling pressure.
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