CAC 40: Test of publications, a mixed reception for the moment

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The CAC lost 0.17% to 8,091 points on Wednesday at the end of a new session marked by nervousness, bending under a new battery of company results whose reception was rather mixed. The incessant questions about the trajectory of rates, on both sides of the Atlantic, also explain this lack of direction.

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.”

Sharp benchmarks will be on the agenda this Thursday and Friday, with the very first estimates of US Q1 GDP at 2:30 p.m. and PCE prices, the Fed’s favorite inflationary barometer tomorrow.

On the values ​​side, there is rich news to report as the quarterly dance intensifies. Kering fell 6.9% back to fall 2017 lows after warning that its current operating profit would fall by 40% to 45% in the first half.

But the biggest drop in the CAC 40 went to Eurofins (-7.7%) following the publication of revenues lower than expectations in the first quarter.

Still on the CAC 40, Orange and Air Liquide lost 3.6% and 2.3% respectively after revealing their publications for the first three months of the year.

In terms of good news, we find STMicroelectronics with the biggest increase in the CAC 40, (+5.4%), benefiting from a favorable cross-reading of the results of the American group Texas Instrument. This semiconductor company gains 6.4% on Wall Street. Considered as a thermometer of the semiconductor industry, it also allows X-Fab to gain 7% at the close this Wednesday evening.

On the other side of the Atlantic, the main equity indices ended a nervous session on Wednesday at levels close to equilibrium, like the Dow Jones (-0.11%) and the Nasdaq Composite (+ 0.10%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers (+0.02%) still manages to preserve 5,000 points.

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 $1.0710. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $82.80.

On the agenda this Thursday, follow the very first estimates of US GDP in Q1 at 2:30 p.m. and current housing sales at 4:00 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 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 8120.00 points.

Hourly graph

Daily Data Chart