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The CAC 40 index, stable at the close yesterday, nonetheless showed a very ugly candle, without a shadow, with an elongated red body, investors being cautious about the attitude of the major central banks on both sides. ‘other of the Atlantic. As a symbol, the flagship tricolor index failed to close just below the psychological threshold of 8,000 points.
If the European Central Bank has slightly more room for maneuver than that of its European counterpart, the Fed, it will have to transform the test on Thursday following a Council of Governors.
This Council of Governors should end, barring any major surprises, with a first reduction in key rates, therefore one step ahead of the United States. A drop of minimum magnitude (25 bps), which would satisfy the expectations of an impatient market. Nomura’s European economists also predict that “Ms. Lagarde should emphasize the dependence on data and adopt a meeting-by-meeting approach”; that “the ECB will slightly raise its GDP growth and inflation projections this year and next, while leaving 2026 unchanged”; and that “with reductions of around 60 basis points by the end of 2024, […] the June ECB meeting and press conference will prove pessimistic compared to market expectations.”
On the Fed side, the window continues to close, even if PCE prices, the Fed’s preferred measure in its assessment of inflation, brought their share of relief on Friday. “The Fed is struggling to find the window to fire,” according to the words of Alexandre Baradez (IG France).
It is in this context that operators will become aware of numerous statistics on private employment, whose persistent tensions are a source of inflation. These statistics (JOLTS, ADP, unemployment benefit registrations) will be published throughout the week, culminating in the federal NFP (Non Farm Payrolls) report for the month of May on Friday. Find our complete statistical calendar here.
“The uncertainty displayed by Jerome Powell reinforces expectations around economic data. Any employment figure (JOLTS, NFP, unemployment, etc.) or activity index (PMI, ISM, regional Fed index), is likely to significantly cause markets to react in search of visibility on the trajectory of employment and inflation, the two mandates of the Fed.”
In terms of statistics on Monday, there is little to eat, apart from the ISM manufacturing index below expectations at 57.0 points all the same. RAS to report concerning the final manufacturing PMI data in the Euro Zone for the month of May, with no significant difference compared to the first estimates.
On the stock side, Eiffage gained 1.7%, supported by Goldman Sachs which raised its buy advice. Atos, on the other hand, lost 18.3%. The company said it had received two financial restructuring-takeover offers. The first comes from Daniel Kretinsky associated with the Attestor fund, the second from the digital services company Onepoint allied with the investment fund Butler Capital, the company Econocom and certain creditors of the group. But in any case, gargantuan dilution awaits Atos shareholders. The dilution of the two offers amounts to approximately 99.9% each, according to documentation posted online by the company. TotalEnergie lost 1.63%, penalized by the decline in crude oil prices.
On the other side of the Atlantic, the main equity indices ended the first session of the week in dispersed order, close to balance however, like the Dow Jones (-0.30%) and the Nasdaq Composite (+0.56%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.11% to 5,283 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 $1.0850. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.00.
On the agenda this Tuesday, to follow in priority the new job offers (JOLTS) in the United States at 4:00 p.m.
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 29/05, 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. This candle followed a bearish encompassing combination.
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.
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