CAC 40: Intense questions, all-round

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With the support of a slight bond easing, the CAC 40 rose 1.03% to 7,706 points on Monday. Tech and the banking sector were in the spotlight, like BNP-Paribas (+3.27%), Soitec (+3.79%), Ubisoft (+4.35%), Wordline (+5 .28%), Société Générale (+2.06%) or Crédit Agricole (+2.00%).

The market is keeping a close eye on developments in French politics as the National Rally, leading in the polls for the legislative elections, presented its program during a press conference. A televised debate is being held this evening, at 9:00 p.m., between Gabriel Attal (Presidential Majority), Manuel Bompard (LFI-Popular Front), Jordan Bardella (National Rally).

“Currently, the question is therefore more whether the correction observed on French equities fully integrates the probable first place (majority or relative) of the National Rally”, for Thomas Giudici, head of bond management at Auris Gestion.

If we have to broadly summarize the market psychology of the last two weeks, we would say that week 24 was marked by a significant decline in the market, after the announcement of the dissolution of the National Assembly, and the entering a period of political uncertainty. And that week 25 will have been marked by a timid rebound of protest, which in one week will have only made it possible to retrace the losses of Friday June 14. The market therefore remains particularly fragile after this rebound without consistency, neither at the level of participation (volumes) nor at the sector level (no federation).

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. He fears that populist groups, such as the National Rally, will implement policies that would weaken France’s already shaky public finances.

In terms of statistics, operators took note of the IFO business climate index in Germany, the leading economic power in the Euro Zone. The index came out lower at 88.6, missing the target. The consumer confidence index (Conference Board) is expected today, before the high point on Friday, consisting of PCE prices (personal consumption expenditures), the Fed’s preferred measure in its assessment of inflation.

On the other side of the Atlantic, the main equity indices closed in scattered order, like the Dow Jones (+0.67%) or the Nasdaq Composite (-1.09%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted slightly, by 0.31% to 5,447 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 $1.0730. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $81.50.

On the agenda this Tuesday, to follow at 4:00 p.m. the consumer confidence index (Conference Board) and the manufacturing index from the Richmond Fed.

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.

Week 25 was the scene of a timid, sideways reaction, without consistency or conviction, either in terms of participation (volumes) or that of the sectors (no federation).

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.

Hourly graph

Daily Data Chart