CAC 40: The markets will only have eyes for the Fed’s dot plots

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For the first session of a week which will be marked by a group shot of meetings of major central banks and by the NVidia conference dedicated to developers, the CAC will have released (a very little) ballast, contracting by 0, 20% to 8,148 points, still keeping a comfortable margin above 8,000 psychological points.

The culmination of these monetary policy meetings is the new FOMC (Fed Monetary Policy Committee) on Wednesday. Not that the issue is a start to loosen the monetary tap – a status quo on rates is acquired -, but to refine the probabilities of a first rate cut in June. In the meantime, at the beginning of May, the next FOMC will also very likely result in a monetary status quo.

Because it must be said that several macroeconomic statistics (consumer prices, producer prices) showed, last week, once again that the return to a theoretical objective of 2% is not an easy task. In short, the fight is still long, and it is the elements of language that will be used to say it that will be dissected the day after tomorrow. Furthermore, the powerful monetary institution will unveil its new economic forecasts.

“Market expectations for the reduction in key rates in 2024 are further reduced, to 3 reductions for the Fed,” notes Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM. The publication of dot plots (dot graph showing the forecast under cover of anonymity of the Fed Funds) will focus the attention of operators.

The market will have a keen eye this week at the Nvidia GTC conference (global artificial intelligence conference dedicated to developers). The opportunity if necessary to find out more about the next generations of chips.

On the stock side, Alstom, which has just left the CAC 40, gained 6.4% supported by Deutsche Bank which raised its recommendation to purchase. The German bank believes that the railway equipment manufacturer has passed the worst of its cash generation and expects its margins to increase significantly.

It is luxury which “penalized” the CAC’s momentum the most on Monday, like the underperformance of LVMH (-0.49%), Hermès (-0.52%), Kering (-0). .63%) or L’Oréal (-1.03%).

Furthermore, Bloomberg launched its own version of the CAC 40, “Bloomberg France 40 Index”, which brings together the largest groups in the Paris market and therefore constitutes in some way the equivalent of the flagship Parisian index at Bloomberg.

On the other side of the Atlantic, the main equity indices continued their rise before the Fed, such as the Dow Jones (+0.20%) but especially the Nasdaq Composite (+0.82%), with strong technological coloring. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, gained 0.63%.

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 $1.0860. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $81.90.

On the agenda this Tuesday, to follow in priority the ZEW index of confidence in the German economy at 11:00 a.m.

Let us continue to point out that since Monday, Wall Street opens at 2:30 p.m. (Paris time), and not 3:30 p.m., quite simply because the East Coast of the United States has already switched to summer time, and we have not yet. The big statistical meetings, often scheduled for 2:30 p.m., are therefore scheduled in the interval at 1:30 p.m.

KEY GRAPHIC ELEMENTS

Thanks to the crossing volumes, the bullish extension since Tuesday and the sectoral federation, we can swing the 8,000 psychological points into support, against which in the long term, a pullback (graphic rejection of confirmation) is not excluded. Now is the time to take a breather from the lessons. The CAC index has traced, in contact with the upper Bollinger band, two candles where the low points, the opening level and the closing level merge. And this before starting a slow decline.

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 8220.00 points.

Hourly graph

Daily Data Chart