CAC 40: Inflation as a central theme this Friday

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It is against a backdrop of increased bond tensions, particularly across the Atlantic, that operators will approach the last session of the week, when the PCE prices will be published at 2:30 p.m. (personal consumption expenditures), the Fed’s preferred barometer for measuring inflation. The monthly rate of increase in prices, excluding food and energy, is expected to increase by 0.3%. Any excess of this consensus would mechanically weigh on the yields of American sovereign bonds, already under pressure since a burst of very firm American statistical figures.

“Very recently, some once again strong figures for activity have reignited uncertainty,” notes Emmanuel Auboyneau, AMPLEGEST Associate Manager. “Consumer confidence is on the rise and the job market has once again shown signs of solidity. The contradictory speeches of the different members of the Federal Reserve are helping to confuse the message.”

Just yesterday, weekly registrations for unemployment benefits, still close to the floor of 200,000 new units, and monthly GDP beyond expectations, contributed to these tensions. The CAC 40, however, managed, on the basis of a protest reaction, to recover 0.55% to 7,978 points, in timid volumes.

The hot topic of inflation therefore returns to the center of the table. To the point that Neel Kashkari, the president of the Minneapolis Fed, upset investors on Tuesday. “Kashkari’s latest comment (…) declaring that additional rate increases have not been completely ruled out, has considerably reduced investors’ appetite for risk,” analyzes Pierre Veyret.

The vast majority of investors only see one rate cut in 2024, in September or even beyond. The CME Group’s FedWatch tool puts the probability of seeing the Fed finally loosening the monetary tap at 48.7% at the end of the FOMC on September 17 and 18.

On the values ​​side, tech suffered somewhat, penalized by the disappointing publication of the American Salesforce which collapsed by 20% on Wall Street. Capgemini, which implements Salesforce solutions (among others) among its clients, suffered from the weaknesses of the American group (-4.38%) when Dassault Systèmes limited its decline to 1.31%.

On the other side of the Atlantic, red dominated the stock indices at the close on Thursday, like the Dow Jones (-0.86%) and the Nasdaq Composite (-1.08%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, depreciated by 0.60% to 5,235 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 $77.60.

On the agenda this Friday, consumer prices in the Euro Zone at 11:00 a.m., and core PCE prices at 2:30 p.m.. All consensus can be found here.

KEY GRAPHIC ELEMENTS

Major technical event Wednesday May 29: the breaking of the lower limit of a bullish channel, in conditions of significant volatility and volumes. The ebb movement takes on meaning, and the next bearish stage is materialized by the gap of February 22, set to be filled, and whose lower limit is worth 7,821 points. Note that the candle, in marubozu Wednesday, illustrated the continued mobilization of the seller camp throughout the session. Closing at the low points of this session calls for the greatest caution in the short term.

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 8000.00 points.

Hourly graph

Daily Data Chart