CAC 40: Welcome return of the American 10-year

(News Bulletin 247) – This article, with open access, is produced by the stock market analysis and strategy research team at News Bulletin 247. To ensure you don’t miss any opportunities, consult all the analyzes and discover our portfolios by accessing our Privileges area.

On Friday, a monthly report on employment across the Atlantic, less firm than anticipated, will have caused certain relief, with concrete consequences on the American 10-year in decline and the stock indices, on the rise, particularly on the technological side of the side. In Paris, although the CAC 40 did not manage to retain all of its gains, it closed up 0.54% to 7,957 points, with the support of luxury goods. LVMH gained 1.96%, Kering 1.78% and Hermès 2.01%.

It was therefore clearly a feeling of relief which prevailed after the publication, on Friday, of the NFP report on the health of American employment. It was not ultimately the health, obviously excellent, of private employment that the operators wanted to gauge, but rather the state of its tensions. And in this sense, even if these tensions are chronic and significant, the main components of the NFP report emerged under consensus.

First of all, the unemployment rate rose slightly to 3.9% of the active population (target at 3.8%). The average hourly wage, up 0.2%, did not rise to the consensus level (+0.3%). And finally, the number of job creations in the private sector (excluding agriculture) showed a very clear contraction compared to March, at 175,000.

The progression of the CAC 40 was slowed by the publication of an ISM for services marking a contraction of this sector in the United States. The index stood at 49.4 in March after 51.4 in March, against a consensus of 52.0. Above all, this statistic highlights a clear acceleration in the prices paid by companies.

On the values ​​side, in addition to the excellent performance of the luxury sector (see above), we note that the technology sector, in the broad sense, was in very good shape on Friday. Thalès gained 1.48% at the close, Cap Gemini 1.68%, and STMIcroelectronics 2.59%. Conversely, Société Générale fell by 5.18%. Up sharply following the publication of its quarterly reports, the stock turned violently at the end of the morning during the conference call with analysts.

On the other side of the Atlantic, the main equity indices finished in positive territory, like the Dow Jones (+1.18%) and the Nasdaq Composite (+1.99%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.26% to 5,127 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 $1.0760. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.40.

On the agenda this Monday, to follow as a priority the final PMI services data in the Euro Zone, at 10:00 a.m. We will also monitor the Sentix investor confidence index in the Euro Zone 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. It is now the level of 8,120 points which plays its role as graphic resistance.

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 cannot be ruled out, 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 8000.00 points would revive the buying tension. While a break of 7821.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart