CAC 40: Spring mood, under the recent zeniths

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The day after the outcome of an FOMC with a dovish tone, the CAC 40 managed to set a new historical record in session data in the wake of Wall Street at 8,229 points from the opening.

As a reminder, J Powell, the head of the Fed, fully reassured the financial community by confirming that the scenario of three cuts in federal rates still held the rope, and that inflation continued, in trend, to decrease, despite some “stirs “. A status quo on the rates for this deadline has been 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.

In terms of statistics, investors took note of the PMI indicators, activity barometers calculated after a survey of purchasing directors. The results are very mixed Euro Zone. In first estimates for the current month, the industrial PMI (45.7) comes out clearly below expectations due to the German component, while the services PMI, conversely, pleasantly surprises by returning significantly above the 50 point mark, synonymous with expansion, at 51.1, beyond expectations.

“The easing of price tensions in the services sector (a sector particularly sensitive to wage increases) will somewhat reassure the European Central Bank. In fact, the increase in prices paid by service providers slowed slightly in March, the prices charged having otherwise followed the same trajectory. The level of inflation remains high, however, and this latest development in PMI price data will not be enough to modify the ECB’s project, which seems to foresee a reduction in its key rate in June rather than April,” commented Norman Liebke, Economist at Hamburg Commercial Bank.

Across the Atlantic, RAS concerning weekly registrations for unemployment benefits, still very close to the floor of 200,000 units. On the other hand, the Philadelphia Fed’s manufacturing index pleasantly surprised, in positive territory at 3.2, while the consensus predicted a decline into the red.

On the values ​​side, Kering (-1.04%) controlled the hemorrhage of the day before (-12%), on warning (warning) on ​​first quarter sales. Forvia gained 3.5%, benefiting from an increase in its purchase recommendation from UBS, leading in its wake Valeo (+2.1%), another major automotive supplier in Paris. Remy Cointreau (+1.9%) is for its part supported by Deutsche Bank which went from “hold” to “buy” on the stock. The bank also went from “sell” to “hold” on Pernod Ricard which increased by 0.9%. Conversely, Capgemini finished bottom of the CAC 40 (-2.7%), penalized by its American comparable Accenture which lowered its sales forecast for 2024.

On the other side of the Atlantic, the main equity indices ended Thursday’s session with a measured rise, like the Dow Jones (+0.68% to 39,781 points), or the Nasdaq Composite (+ 0.20% to 16,401 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.32% to 5,241 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 $1.0830. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $80.50.

On the agenda this Friday, to follow in priority the IFO business climate index in Germany at 10:00 a.m. and a speech by J Powell, President of the Fed at 2:00 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 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 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