CAC 40: The 8,000 points hold up

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On technical bases, combined with a satisfactory start to the quarterlies of large groups, the CAC 40 rose 0.81% to 8,105 points, with major macroeconomic meetings approaching. The publication of the first estimates of US GDP on Thursday and PCE prices on Friday, as well as a battery of quarterly publications, could further support the scenarios on the trajectory of the Fed Funds.

“Jerome Powell’s change of tone has therefore maintained upward pressure on American rates which are now trading at the levels of early November. Relatively immune until then, the stock markets have finally marked time,” analysis in a post Thomas Giudici, head of bond management at Auris Gestion.

“It must be said that seeing American equity markets up almost 10% while 10-year rates had recovered 70 bps (+80 bps to date) since their lows at the end of December could seem counterintuitive. On the eve of their publication of results, the “Magnificent 7” (Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla) dropped almost 8% last week. These therefore promise to be crucial to hope for a rebound in the markets. which could, otherwise, correct more strongly.”

Investors dealt yesterday with the first estimates of PMI activity indicators in Europe. On the scale of the entire Euro Zone, these barometers appear contrasting, below expectations for industry (45.6) and above for services (52.9).

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, comments on the latest survey figures: “Given the latest PMI data, the ECB may hesitate to lower its interest rates in June. Some members of the Central Bank are indeed worried about the acceleration of cost inflation, driven not only by the increase in oil prices but also, and more worryingly, by the increase in wages. prices charged by service providers recorded during the month also raises fears of the continuation of underlying inflation in the services sector. If the ECB nevertheless seems determined to ease its monetary policy, it should do so cautiously and. not with a “pragmatic gradualism, without haste but without exaggerated wait-and-see attitude” as recommended by the governor of the Bank of France, François Villeroy de Galhau.

On the values ​​side, Renault finished its race in the green (+0.40%) after spending most of the session in negative territory. The group certainly published revenues slightly above expectations in the first quarter, both for the group as a whole and for the automotive division. But the strong progression of the stock in recent weeks was a pretext for profit-taking during the session, while the publication was “only” slightly better than expected.

The cloud specialist OVH, on the other hand, experienced its worst close since its IPO in October 2021. The stock plunged 17.60% while the company lowered its like-for-like growth forecast for the entire its financial year ending next August, expecting an increase of between 8% and 9% compared to 11% to 13% previously.

On the other side of the Atlantic, the main equity indices ended Tuesday’s session in the green, like the Dow Jones (+0.69%) and the Nasdaq Composite (+1.59%). . The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.20%.

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 $1.0700. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $82.50.

On the agenda this Wednesday, to follow as a priority orders for durable goods in the United States at 2:30 p.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