CAC 40: Powell reassures by confirming a scenario of 3 rate cuts this year

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The CAC 40 is expected to be in the green this Thursday, the day after the outcome of the Fed’s FOMC. J Powell fully reassured the financial community by confirming that the scenario of three cuts in federal rates held up, and that inflation continued, on trend, to decrease, despite some “stirs”. A status quo on rates for this maturity was confirmed, as widely expected.

Whitney Watson, Co-Head & Co-CIO, Fixed Income & Liquidity Solutions, Goldman Sachs Asset Management believes that “the progress of inflation over the past year and the signals of disinflation, with the rebalancing of several markets ( particularly the labor, property and rental markets), will lead the Fed to begin its cycle of rate cuts this summer.”

“Overall, despite recent hiccups on the road to inflation, major central banks remain on track to cut rates in the coming months.”

The June FOMC should be the starting point for this rate cut, with a probability of 74.4% according to the CME’s FedWatch tool.

On Wednesday, the CAC fell somewhat below its historic peaks, weighed down by Kering (-11.91%). The luxury group had published a warning on its sales the day before after the market. LVMH (-1.63%) and L’Oréal (-1.01%), in the same sector, were mechanically penalized.

On the value side, apart from the luxury sector which has focused most of the attention, Orpea has soared by more than 20% as the share consolidation operation aimed at removing the stock from the stock market ended on Thursday evening. unflattering category of “penny stock”. Note that the group will change its name to Emeis in order to turn the page on a stock market rout which began on January 24, 2022, with the release of the investigation book Les Fossoyeurs highlighting facts of mistreatment in its establishments.

Beneteau jumped 8.2% driven by its annual results which pleasantly surprised the markets.

On the other side of the Atlantic, the main equity indices ended significantly higher, in a grouping, like the Dow Jones (+1.03% to 39,512 points) and the Nasdaq Composite (+1 .25% at 16,369 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.89% to 5,224 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 $1.0930. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $81.60.

On the agenda this Thursday, to follow as a priority the first estimates of the barometer indicators of PMI manufacturing and services activity in the Euro Zone at 10:00 a.m., and across the Atlantic, the Philly Fed and weekly registrations for unemployment benefits at 1:30 p.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 shift 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 identified, our opinion is neutral on the CAC 40 index in the short term.

We will take care to note that crossing 8220.00 points would revive the buying tension. While a break of 8000.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart