CAC 40: Clinging to 8,000 points

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At the dawn of a session which will be marked by a battery of quarterly publications from large groups, and by sharp macroeconomic benchmarks for the United States on Thursday and Friday, the CAC 40 will have experienced a transition session on Monday, gaining some 0 .22% for a close 40 points above the highly psychological threshold of 8,000 points.

The market continues to move according to the moods of sovereign rates on both sides of the Atlantic, and according to the ebb and flow of diplomatic tensions in the Middle East.

Investors will be aware of an avalanche of publications with around twenty CAC 40 groups (Hermès, Totalenergies, Airbus, Renault to name a few) which will reveal this week revenues or complete accounts for the first quarter. In the United States, Microsoft, Alphabet, Meta, Tesla and General Motors will deliver their first quarter results.

In terms of statistics, there is little to get your teeth into on Monday, and in general for the first part of the week. But from Thursday, everything will accelerate with the publication of the very first estimates of GDP for the first quarter in the United States. Then the next day the PCE prices will be published (personal consumption expenditures), the Fed’s preferred barometer in its assessment of price increases.

This data will be crucial for operators looking for clues on the trajectory of US Federal Reserve rates. The statistics published in recent weeks across the Atlantic demonstrate the robustness of the world’s largest economy, and have somewhat dashed hopes of a first rate cut from the Fed in June.

“How far away seems this “pivot” from the president of the Federal Reserve in December, when the question of rate cuts was raised for the first time after an express cycle of monetary tightening,” notes Alexandre Baradez (IG France).

The option of a first cut in federal rates in July certainly remains on the table, but what about next? A long plateau of altitude before a very slow decline?

“Faced with the resilience of underlying inflation in recent months and in the face of still robust employment data, Jerome Powell ended up following in the footsteps of the many Fed “speakers” who had been much more cautious about the timing of the first rate cut,” continues M Baradez.

“The American equity markets which had drunk the words of Jerome Powell in December and which had ignored the significant rebound in rates in recent months were forced to adjust their focus and correct the excesses.”

On the value side, Alstom gained 2.25% after gaining more than 5% in the first exchanges. The group announced an asset sale for more than 600 million euros with its conventional signaling activity in North America. A guarantee given to the market on its deleveraging, even if this operation could have been anticipated by the market (which explains the weak reaction of the stock). Edenred gained 2.7%, benefiting from cheap purchases after falling by almost 7% on Friday, the stock reacting to the legal developments in the investigation of which the group is the subject in Italy.

On the other side of the Atlantic, the main equity indices ended the first session of the week in the green like the Dow Jones (+0.67%) and especially the Nasdaq Composite (+1.11 %). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.87% to 5,010 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 $1.0640. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $82.10.

On the agenda this Tuesday are the first estimates of PMI activity indicators in services and industry. Summary data for the entire Euro Zone will be published at 10:00 a.m.

KEY GRAPHIC ELEMENTS

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 towards the lower part of an ascending channel (in black) on the daily chart. The session of Tuesday April 2, by the volumes, the length of the red body of the corresponding candle, reinforced the 8,220 points as a difficult level to cross.

Then a major technical event occurred, namely the breaking of the gap, the highly symbolic threshold of 8,000 points. The latter, however, does not appear as a scar on the index in the sense that it was filled in from the following session.

We are in the heart of a deep, legitimate breath on the flagship tricolor index.

Two bearish targets present themselves: the bullish gap of February 22, the lower limit of which is worth 7,821 points, then the intermediate support at 7,700 points. Until then, the occasional formation of sharp downward acceleration in prices is not excluded, before remobilization of the buying camp.

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 8120.00 points would revive the buying tension. While a break of 7700.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart