(News Bulletin 247) – The period of intense volatility that has opened up on the markets since the Russian military aggression in Ukrainian territory is far from over. While the CAC 40 broke a weakened bottom zone at 6,760 points, it achieved a pullback exactly on it at the end of the week (+3.55% to 6,752 points on Friday). An opening in bright red is to be expected this Monday, within the meaning of futurethe markets being in the uncertainty generating stress as to the outcome of the conflict, the long-term consequences, the consequences on the prices of raw materials, on the supply of natural gas, particularly in Germany, and on the reaction of the ECB and the Fed.
“Consequences are to be expected for the price of oil, already marked by fears of inflation, and the symbolic cap of 100 USD for crude oil could panic the algorithms. This context, however, makes an aggressive rise in rates unlikely. the share of central banks, which could influence their dynamic”, for Alexandre Neuvy, Managing Partner Amplegest. And that’s the whole point of the meteoric rise of the Nasdaq Composite in Thursday’s session, despite a very wide bearish gap opening. The question is therefore to what extent the Fed will react to this “black swan”. The powerful monetary institution meets in March its Monetary Policy Committee (FOMC) and so far, a double increase (ie 50 bps at once) of the Fed Funds was likely.
“The US Federal Reserve must end asset purchases in early March, before raising its rates at the FOMC on March 15 and 16. The current situation, and in particular the race for the dollar, could put a stop to this calendar to allow it to to support the monetary system. notes Vincent Boy, IG France market analysis. “The probability of a rate hike of 50 bps also fell sharply over the weekend, dropping from 25% to just 5% this morning.”
In the meantime, international sanctions targeting Russia and its economy are increasing. Many countries have decided to block the SWIFT system of international transactions for a battery of Russian banks, to penalize imports and exports. Moreover, and “For the first time in its history”, as noted by M Boy, “the European Union will buy and send weapons to a country at war, in order to support Ukraine from the Russian invasion.”
On the statistical side, the main macroeconomic figures were relegated to the background on Friday despite their satisfactory character, whether for PCE prices, durable goods orders and household income and expenditure in the United States.
On the values side, Vallourec soared 25.93% to 8.50 euros in exceptionally high volumes, thanks to a return to profits and a reduction in debt. And unsurprisingly, the manufacturer of seamless tubes is expecting a further improvement in its results this year given the demand from hydrocarbon producers, encouraged to relaunch their investments by the rise in prices. Within the flagship index, the best performance went to ArcelorMittal (+10.05% to 27.42 euros), which benefits from the surge in metal prices, especially nickel.
On the other side of the Atlantic, the main equity indices rebounded, such as the Dow Jones (+2.51% to 34,058 points) or the Nasdaq Composite (+1.64% to 13,964 points). ). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 2.24% to 4,384 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.1170. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $91.70.
To follow in priority, on the agenda this Monday, the trade balance of goods at 2:30 p.m. and still across the Atlantic, the Chicago PMI index at 3:45 p.m.
KEY GRAPHIC ELEMENTS
The 6,760 points, which we have identified so far as a gradually weakened floor, will give way this morning, on a wide gap, opening the way to a new market phase. Recall that the index traced from February 16 to 18 a combination of candles in three crows. This combination was immediately followed by a very significant bearish engulfing structure, accompanied by volumes that were far from timid for a session, let’s not forget, without American benchmarks due to a public holiday. The last phase of weakening of the aforementioned support will therefore have been aggressive. the pullback Friday will have been surgically precise. A phase of high volatility begins.
In view of the key graphic 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 trading below the resistance at 6760.00 points.
Hourly data chart
Chart in daily data
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