(News Bulletin 247) – This article, freely accessible, is produced by the News Bulletin 247 stock market analysis and strategy research team. To not miss any opportunity, consult the full analyses and discover our portfolios by accessing our Privileges area.
The market was volatile on Monday, the day after the final results of the second round of the legislative elections. The CAC, which opened in the red, recovered significantly during the session before showing a little heaviness, to end close to its opening levels. Graphic result: a candle almost without a body, with a very pronounced upper shadow. Because if the risk of an absolute majority of the National Rally, feared for a time by the market, everything is still to be built. Negotiations between political camps will begin, in order to be able, next step, to form a government.
According to the final data provided by the Ministry of the Interior, the New Popular Front Alliance comes in first with 182 seats, Ensemble cushions its fall with 168 seats, and the National Rally, although significantly increasing its contingent of deputies, only comes in third position, with 143 seats.
“There are still quite a few scenarios after this second round, but it is still good to remember that the stress in the financial markets initially observed was generated by the assumptions of an absolute majority and the concomitant implementation of economic programs deemed to be not very credible,” explains Alexandre Baradez (IG France). “With these extreme scenarios now ruled out, market volatility, even if it does not completely fall back due to the persistence of political uncertainties, should still take them into account.”
On Monday afternoon, the S&P rating agency also pointed out this risk of a lack of rigor in the management of public finances. It warned that France’s credit rating would be “under pressure” if the country failed to reduce “its significant public deficit.”
In terms of statistics, operators have had to deal with the publication in the morning of the Sentix investor confidence index, which fell to -7.3.
On the value side, some sectors were supported by the setback of the National Rally (RN). This is the case for the audiovisual groups TF1 (+1.9%) and M6 (+1.8%), because the RN wanted to privatize public audiovisual, which would have put the advertising market under pressure. Vinci (+0.43%) and Eiffage (+1.01%) outperformed. The RN, in its program, wanted to nationalize motorway operating activities, currently in the form of concessions. Relief also for some renewable energy groups such as McPhy (+3.9%) or Voltalia (+6.6%), the far-right party having adopted an unfavorable tone towards this type of energy during the campaign.
Excluding political news, Ubisoft jumped 7.8%, supported by a buy rating upgrade from Jefferies. The American bank said it was enthusiastic about the company’s release schedule, the group’s model’s shift toward more recurring revenue, a shift in cash generation and its low valuation.
On the other side of the Atlantic, the main stock indices ended Monday’s session at very firm levels, close to equilibrium, like the Dow Jones (-0.08%) or the Nasdaq Composite (+0.28%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.10% to 5,572 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 $1,0830. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $81.80.
On the agenda this Tuesday, to follow as a priority at 12:00 the NFIB index of small businesses, then the biannual hearing of J Powell, Chairman of the Fed, before Parliamentarians.
KEY GRAPHIC ELEMENTS
The shoulder, head and shoulders graphic pattern drawn since April 16 is in the process of breaking its neckline line, which corresponds more or less to the gap of February 22, fully filled on June 11 during the session. The short-term graphic configuration is significantly degraded. One after the other, the leading French index has 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 was formed on January 26th following the publication of an excellent quarter from the luxury giant. Its lower limit at 7,465 points was tested twice, and by this measure, weakened. The weekly candle of week 24 shows a strong and continuous mobilization of the seller 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. Bearish engulfing bands appear at the top of the range (June 26, July 5).
FORECAST
Considering 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 7690.00 points.
The News Bulletin 247 council
Hourly data chart
Daily data chart
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
