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Against a backdrop of increasingly supported hopes of a fall in federal rates at the start of the school year, the CAC 40 attempted, albeit in meager volumes, a rebound from a safety zone at 7,465 points, which the risks of instability, or even political paralysis, could undermine in the coming weeks.
Fed Chairman J Powell was grilled for the second day of questions from US Congressmen. The day before, before the Senators, the central banker said that maintaining an overly restrictive monetary policy “could unduly weaken economic activity and employment” and that “labor market conditions have now cooled considerably,” Deutsche Bank noted.
“So there was a recognition of the risk of waiting too long,” the German bank concluded. Jerome Powell spoke on Wednesday, this time before a committee of the House of Representatives. But his speech on Tuesday, which highlighted “progress” on inflation, was little changed.
It is in this context that operators will learn this Thursday about consumer prices in the United States, expected to slow down to 3.1% on an annual basis in the broadest basket of products. A figure that would then transform the test after last week’s publications (ISM Services and NFP report), which showed a lack of warming up of the American economy. The challenge is to confirm or deny the scenario of a so-called soft landing (or kiss landing) of the world’s leading economy.
The CME Group’s FedWatch tool now puts the probability of a first loosening of the monetary tap by direct action on rates at over 75% following the next FOMC meeting on September 17-18.
On the stock market side, the news was calm before the start of the half-yearly publications next week. At the top of the Parisian flagship index, Vivendi gained 3.2%, followed by Teleperformance and Eurofins Scientific (+2.3%), while Publicis (-1.1%), Michelin (-0.7%) and Veolia Environnement (-0.5%) brought up the rear.
On the other side of the Atlantic, the main stock indices ended the session in the green, like the Dow Jones (+1.09%) and especially the Nasdaq Composite (+1.18%), which is flying from record to record. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.02% to 5,633 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 $1,0840. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $82.00.
On the agenda this Thursday, to follow at 2:30 p.m. across the Atlantic the weekly registrations for unemployment benefits and especially the dynamics of consumer prices.
KEY GRAPHIC ELEMENTS
The technical situation is extremely fragile in the short term, with volatile oscillations expressed in a range between 7,465 and 7,700 points. In the event of a break of this first threshold, which corresponds to the lower limit of a former remarkable gap, an additional “purge” movement, the second, would take shape. We are doubling our caution as it approaches.
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 7465.00 points would revive selling pressure.
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