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July 4th… A date dear to Americans, since it corresponds to the anniversary of Independence (Independence Day), a public holiday and a day off in large parts of the economy. The stock market is no exception, since Wall Street will remain closed. Yesterday, the session was already shortened, with a closing at 1:00 p.m. (Eastern Time).
The CAC, which has been very nervous since Emmanuel Macron announced the dissolution of the National Assembly, started to rise again on Wednesday, helped by signals confirming a scenario of a soft landing for the American economy.
The ISM services PMI in particular came out well below the 50 mark, at 48.8, while this activity barometer was expected at 52.6. On the other hand, weekly registrations came out in line with expectations, at 238,000 new units. But this was not the only statistic on employment since the ADP firm published its monthly copy, with 150,000 job creations in the private sector, which means a cooling of the employment machine… Enough to provide water to the mill of J Powell, who had been reassuring the day before, during a speech at the Sintra forum.
The verdict on employment will be delivered on Friday with the federal NFP (non farm payrolls) report.
“Market sentiment is up on Wednesday, especially after Powell (Jerome, the chairman of the US Federal Reserve, editor’s note) reassured investors that inflation is trending downward, moving closer to the Fed’s 2% target. Although eyes remain on political developments in the UK and France this week, traders and analysts were pleased to see a positive development on the monetary front,” underlines Pierre Veyret, analyst at Activtrades.
In terms of values, Sanofi ended slightly down 0.2% as Dupixent is now authorized to treat smoker’s bronchitis in Europe. But the stock did not benefit from the news, being neglected due to its status as a defensive stock in a context of risk appetite. Banks, strong in their current Beta effect, were in sight, like BNP-Paribas (+2.45%), Société Générale (+2.18%) and Crédit Agricole (+2.24%).
On the other side of the Atlantic, for this shortened session on Wednesday, the main stock indices ended in the green, with the support of various statistics arguing for a slowdown in the world’s leading economy, which fuels hopes of a more accommodating US Federal Reserve in its monetary policy. With the exception of the Dow Jones, whose composition is rich in banks, part of whose remuneration depends on the firmness of rates. The Nasdaq Composite on the other hand, rich in files with very high PER, gained 0.88% to 18,188 points, on the high points of the session, which constitute a new historical record. The S&P500, a reference barometer of risk appetite in the eyes of fund managers, gained 0.51% to 5,537 points.
An update on other risky asset classes: around 8:00 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 risk appetite on financial markets, was trading around $82.70.
On the agenda this Thursday, the main focus across the Atlantic is the legislative elections in the United Kingdom.
KEY GRAPHIC ELEMENTS
The shoulder, head and shoulders graphic pattern drawn since April 16 is in the process of breaking its neckline, which corresponds more or less to the gap of February 22, completely filled on June 11 during the session. The short-term graphic configuration is significantly degraded.
One after the other, the French flagship index failed two major technical tests: it broke out from the bottom of a channel on May 29, and as seen previously, it broke out from the bottom of a chart pattern on June 10. Below 7,900 points, the situation remains worrying..
The “LVMH” gap has been filled. Wide, it had been formed on January 26th in the wake of the publication of an excellent quarter from the luxury giant. Its lower limit at 7,465 points has been tested twice, and by this measure, weakened.
The weekly candle for week 24 shows a strong and continuous mobilization of the selling camp throughout the time unit.
Week 25 was the scene of a timid reaction in a wedge, without consistency or conviction, neither in terms of participation (volumes) nor that of sectors (no federation). A wedge which abruptly turned into tidy (lateral channel), between 7,465 points and 7,690 points. The market’s nervousness is expressed erratically.
FORECAST
Considering the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
It should be noted that a crossing of 7690.00 points would revive buying tension. While a break of 7415.00 points would revive selling pressure.
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