CAC 40: Reflux of the American 10-year, a guaranteed supply of oxygen

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While the scenarios for lowering federal rates are somewhat revised, the CAC 40 took the opportunity to gain ground on Tuesday (+0.99% to 80,075 points), in volumes which were however not very substantial due to the particular nature of the week, including two public holidays, not working on the Paris Stock Exchange. In any case, the absence of many operators mechanically reduces activity.

Optimism about rate cuts by the American Federal Reserve (Fed) seems to be returning among investors. According to the CME Group’s FedWatch tool, they expect more than 60% of two key rate reductions by the end of December from the American central bank.

“New York Fed President John Williams said there are signs that households are more cautious in their spending, and he expects rate cuts eventually, although the decision to lower them will depend on all the available data,” report analysts from Natixis CIB Research, cited by Agence France Presse.

“Thus, the Fed could start lowering rates as soon as the summer break ends,” they add.

On the values ​​side, investors continued to dissect the results of companies, notably those of Bouygues (-1.6%), which turned out to be lower than the consensus, in the first quarter.

Outside of the results, Remy Cointreau gained 6% and Pernod Ricard 3.1%, with both spirits groups supported by Emmanuel Macron’s statements. The President of the Republic thanked his Chinese counterpart, Xi Jinping, on Monday evening, affirming that the latter would not apply sanctions on French cognac.

Ubisoft gains 3.7% driven by Stifel which raised its purchase recommendation on the video game publisher, citing both the catalog of releases for the next fiscal year and the attractive valuation of the group.

On the other side of the Atlantic, the main equity indices closed Tuesday’s session in scattered order, like the Dow Jones (+0.08%) and the Nasdaq Composite (-0.10%). . Note that the S&P500 (+0.13%), the benchmark barometer of risk appetite in the eyes of fund managers, finished 187 points above the highly symbolic threshold of 5,000 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 $1.0740. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.70.

On the agenda this Wednesday, to follow across the Atlantic wholesaler stocks at 4:00 p.m. and crude oil stocks at 4:30 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. 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 8120.00 points would revive the buying tension. While a break of 8000.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart