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The CAC 40 is expected to fall moderately this Friday, as the final data on inflation figures (retail prices) in the Euro Zone for the month of April approaches. The week was definitely marked by these inflationary indicators, on both sides of the Atlantic, and by the difficult reading of the trajectories of the key rates of the ECB and the Fed for the months to come.
These consumer prices in the Euro Zone were estimated by Eurostat in preliminary publication at +2.7% in “core” data, namely excluding food, energy, alcohol and tobacco, the most volatile elements.
As a reminder, as a statistical highlight of this week under the sign of inflation, the American CPI (consumer price indices) reassured on Wednesday after the more worrying publication the day before, producer prices. Excluding food and energy, retail prices increased by 0.3% in April, moderately and in line with the target. Over one year, these prices increased by 3.6%, compared to 3.8% the previous month.
“After short-term observations, we can however consider that the progress made in recent months has been made with difficulty. In 8 months, underlying inflation (CPI core) has only slowed by 0.5%. And this echoes the numerous declarations of members of the Fed, including those of its president, highlighting the lack of significant progress in recent months”, nuance Alexandre Baradez (IG France).
“We could therefore begin to think that the American economy needs to slow down a little more for the Fed to be convinced that inflation is indeed returning, and in a sustainable manner, towards the 2% objective, and thus proceeds to its first rate cut.”
On the statistical side on Thursday, the day’s indicators (registrations for unemployment benefits, Philly Fed, housing starts and building permits) did not contain any unpleasant surprises (in the Fed’s sense!). Investors also took note of the publication of industrial production for April in the United States, which fell by 0.3% over one month. Which “continues the series of weaker activity data and will further reinforce expectations of a reduction in interest rates from the Fed (American Federal Reserve, Editor’s note) in September,” says Capital Economics. And on the production volume front, stable, and the production capacity utilization rate.
On the values side, Ubisoft fell 13.5% after publishing disappointing prospects for its 2024-2025 financial year in terms of non-IFRS operating income. Elior, conversely, jumped 22.8%, following half-year results considered “encouraging” by Oddo BHF. The group also raised its margin outlook for the current financial year. Vallourec turned around during the session and gained 0.8% after losing as much as 6.5% as the company unveiled a lower-than-expected gross operating profit target for the second quarter, notes Oddo BHF.
On the other side of the Atlantic, the main equity indices closed Thursday’s session in a slight decline, hot after the recording of new zeniths, like the Dow Jones (-0.10% at 39 869 points) or the Nasdaq Composite (-0.26% to 16,698 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.21% to 5,297 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 $1.0860. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $79.10.
On the agenda this Friday, to follow as a priority consumer prices in the Euro Zone, in final data for April, at 11:00 a.m. Note the very good dynamic of Chinese industrial production, published overnight beyond expectations, at +6.7% on an annual basis.
KEY GRAPHIC ELEMENTS
The resistance level of 8,120 points gave way on Thursday 09/05 in insignificant volumes due to the absence of numerous operators. However, in the very short term, the new working framework is between these 8,120 points, and the absolute peaks close to 8,220 points, i.e. a thin band of around a hundred points. All taking place at the heart of an ascending channel, the lower limit of which (support) can be tested quickly.
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 8220.00 points.
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