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There were opposing forces at work in the markets yesterday. On the one hand the stratospheric publication of NVidia, Wednesday evening after the stock market, which propelled the new Nasdaq reference up by almost 10%, and on the other hand the monetary problem, with a restrictive scenario which has held the rope since the Minutes published Wednesday evening, and reinforced by American statistics on Thursday (registrations for unemployment benefits, PMI).
The CAC 40 very clearly limited its closing gains, ending the session close to its opening level, up very slightly by 0.13% to 8,102 points.
In the first quarter (ended at the end of April 2024), Nvidia once again repeated the feat of exploding analysts’ expectations by revealing revenues of $26 billion, compared to $7.19 billion in revenues generated during the same period. last year. The increase is therefore dizzying, since its sales have simply tripled over one year. And yet, expectations were already very high, with analysts’ consensus targeting a turnover close to $25 billion over the period.
“It has been a long time since the global economy has been so dependent on a single company. Its importance is certainly comparable to that of the East India Company in the 17th century,” says Christopher Dembik, investment strategy advisor. at Pictet Asset Management.
“In the immediate future, we do not see which player could weaken Nvidia’s foundation, especially after its recent partnership with Dell Technologies which should allow the group to move on to the second phase of the AI revolution, that of democratization. The agreement will enable companies of all sizes to have access to a single end-to-end AI solution, from the edge to the core of the cloud, at an affordable price.
Remember that Nvidia indeed dominates the market for graphics chips essential for generating advanced tasks and applications in artificial intelligence. Microsoft and Google are therefore equipping themselves with thousands or even tens of thousands of Nvidia A100 graphics processors (GPUs) in their data centers to develop and train their conversational robots, ChatGPT and Bard respectively.
In terms of American statistics on Thursday, investors took note of the weekly registrations for unemployment benefits, still very close to the threshold of 200,000 new units. Another leading indicator of inflation, the PMI activity barometers: The S&P Global composite PMI index increased to 54.4 in May, in a first estimate, against 51.3 points the previous month. This is its highest level in almost two years. These are all signals which testify to the robustness of the world’s largest economy, and which in turn fuel tensions on the bond market. The yield on 10-year US debt is now approaching 4.50%.
PMI barometers were also published for the Euro Zone in the morning. On the scale of the entire Euro Zone for the month of May, it is the increase in industry which is the most pleasant surprise, at 47.4. Note that the score, still significantly below 50 points, suggests a contraction in the sector. In services, the score is in line with expectations, at 53.3, stable compared to the final data for April.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, provided the following insights:
“German economic performance surpasses that of France, thanks to strong growth in the services sector, which is contracting in France. If the French manufacturing sector is doing better than its German counterpart, it However, it also fails to emerge from the recession. Although it is often tempting to compare the economic performances of various countries, and to highlight possible strengths or weaknesses, it is reassuring to note that the two main economies. of the region are generally in phase. France therefore has a good chance of catching up in the services sector, which would allow growth in the euro zone to get back on a more solid footing.”
On the value side, the technology sector was in good shape, in the wake of NVidia, like Cap Gemini (+2.75%), or STMicro, at least in the first part of the session… Euroapi jumped by 10 % after announcing an agreement to produce active ingredients for a global animal health company. The expected total value of the contract is of the order of 130 to 150 million euros, over the period 2025-2029.
On the other side of the Atlantic, the main equity indices ended the Thursday session in the red (more or less dark), like the Dow Jones (-1.53%) or the Nasdaq Composite ( -0.39%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.74% to 5,267 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 $1.0810. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $76.80.
On the agenda this Friday, to follow as a priority orders for durable goods in the United States at 2:30 p.m.
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. This is a major technical test, which can occur as early as this Friday.
If we zoom out a little, it is a wide band of 400 points which can accommodate, in the weeks to come, nervous oscillations. A contrarian attitude is going to be key for mobile investors.
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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