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Another complicated session for the CAC 40 which on Wednesday, in the absence of a benchmark from Wall Street closed for a public holiday, lost 0.77% to 7,570 points, in mechanically timid volumes. The market remains very upset by the lack of visibility, at this stage, on the color and composition of the next government, and the positioning of the center of gravity of the hemicycle.
“Fears which relate to the programs of the political blocs which are trying to form themselves…or which have just been formed”, explains Alexandre Baradez (IG France). “Fears relating to the trajectory of the debt but also to questions of regulatory change and taxation.”
The market fears that populist groups, such as the National Rally, will implement policies that would weaken France’s already shaky public finances.
“At this stage, investors are immersed in uncertainty. It must be said that none of the possible scenarios currently seems favorable to the financial markets. Indeed, while the trend in French public finances was already not particularly bright, the “The prospect of particularly wasteful programs at both extremes raises fears of the worst for French debt”, explains Thomas Giudici, head of bond management at Auris Gestion.
“It is therefore no longer surprising to now see France borrowing more expensively than Portugal and closer to Greece or Italy than to Germany,” notes the manager bitterly. “Will France, a new peripheral country, join the club of weak countries in the euro zone (PIIGS: Portugal, Italy, Ireland, Greece and Spain)? Our chauvinism is taking a hit…”
And it is precisely in the middle of the legislative campaign that the European Commission opens an investigation against France for excessive “deficit”.
In terms of statistics on Wednesday, there was nothing substantial to get your teeth into. Let us cite the NAHB index of American residential real estate which narrowly missed the consensus.
On the values side, Dassault Systèmes lost 3.1% penalized by a lower recommendation from BNP Paribas Exane. The research office downgraded its opinion to underperform and lowered its price target to 30 euros. The entire technology sector was penalized, like Alten (-2.72%), Wordline (-2.80%), XFab (-3.94%), or Soitec (-2.91% ). On the other side of the rankings, Accor signed the second strong increase in the CAC 40 (+1.45%), just behind Publicis (+1.46%) while Barclays moved to “overweight” on the value, appreciating its upscaling and its geographical positioning.
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 $1.0740. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $80.70.
On the agenda this Thursday, to follow in priority at 1:00 p.m. the monetary policy decision of the Bank of England and at 2:30 p.m. the new weekly registrations for unemployment benefits in the United States.
KEY GRAPHIC ELEMENTS
The shoulder, head and shoulder graphic figure traced since April 16 is in the process of breaking its neckline, which corresponds more or less to the gap of February 22, fully filled on 06/11 during the session. The short-term graphic configuration is significantly degraded.
In quick succession, the flagship tricolor index failed two major technical tests: it exited the bottom of a channel on May 29, and as seen previously, it exited the bottom of a chart pattern on June 10. Below 7,900 points, the situation remains worrying.
The “LVMH” gap has been filled. Ample, it was formed on January 26 following the publication of an excellent quarterly report from the luxury giant.
The weekly candle of week 24 testifies to a strong and continuous mobilization of the selling camp throughout the unit of time.
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 7900.00 points.
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