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The CAC 40 fell significantly below the threshold of 8,000 points on Monday, the day after the President of the Republic announced the dissolution of the National Assembly. A decision which follows the score of the National Rally list (31.50%) in the European elections. The market sees this as a (too?) bold bet, opening up a period of uncertainty.

“This phase of political uncertainty therefore “offers” investors a window to take some of their gains on the index. Also knowing that the recent downgrading of the sovereign rating by a rating agency adds to this overall situation “, analyzes Alexandre Baradez (IG France).

A phase of volatility therefore begins until the end of the legislative elections, on July 7.

The index, however, limited the damage, as it lost more than 2% at the lowest point of the session.

“Great uncertainty now hovers around the future composition of the National Assembly and the government that could result from it. Indeed, let us remember that unlike yesterday’s election, the two-round nature of the legislative elections accentuates the importance of negotiations ahead of the election to bring about rapprochements between political forces in order to maximize the chances of winning, in 577 different constituencies,” says Banque Richelieu.

Only certain candidates can stand in the second round: the 2 candidates who came first, and the following candidates, provided they have obtained a number of votes at least equal to 12.5% ​​of the number of registered voters.

In terms of statistics, although relegated to the background, operators have taken note of the Sentix investor confidence index in the Euro Zone, which rose to 0.3.

On the securities side, banks, cyclical stocks par excellence, suffered more particularly. Société Générale drops 7.5%, BNP Paribas 4.8% and Crédit Agricole SA 3.6%. The motorway concession groups Vinci and Eiffage respectively sold 5.4% and 5.8%. The RN, in its 2022 presidential program, proposed to renationalize the motorway concessions. Eramet escaped this downward movement, and finished at the top of the SBF 120 (+3.8%), thanks to the support of Bank of America which raised its price target to 160 euros from 120 euros, while remaining a buyer of the file.

On the other side of the Atlantic, the French political turmoil seems very far away… The Dow Jones gained 0.18% and the Nasdaq Composite 0.35%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.26% to 5,360 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 $1.0770. 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 Tuesday, to follow in priority the NFIB index of American small businesses at 4:00 p.m.

KEY GRAPHIC ELEMENTS

The shoulder, head and shoulder graphic figure traced since April 16 is in the process of breaking its neckline, which more or less corresponds to the gap of February 22, fully filled yesterday during the session. the short-term graphic configuration is degraded.

In quick succession, the flagship tricolor index failed two major technical tests: it exited from the bottom of a channel on May 29, and as seen previously, it exited from the bottom of a chartist figure on June 10 .

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.

News Bulletin 247 advice

CAC 40
Negative
Resistance(s):
8000.00 / 8220.00
Support(s):
7680.00 / 7415.00

Hourly graph

Daily Data Chart

CAC 40: The 8,000 points stand up to political turmoil (©ProRealTime.com)