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After failing against a resistance zone that settled near 7,700 points at the start of the week, the CAC 40 continued its navigation in tidywith a certain volatility, in light of the nervousness of the market since the dissolution of the National Assembly by E Macron, which caused early legislative elections, with a new hemicycle divided into three blocks comparable in seat, with the risk that goes with it: that of political paralysis at best, and chronic instability at worst. The flagship Parisian index lost 0.12% to 7,570 points.
The tech sector is the focus of market concerns. Bloomberg reported on Wednesday that the Biden administration was considering imposing restrictive measures on companies – the agency specifically cites the Dutch ASML and the Japanese Tokyo Electron – if they continued to give China access to advanced semiconductor technologies. In Paris, XFab (-2.00%) and Teleperformance (-7.52%) lost ground.
The European Central Bank is concluding a meeting of its Governing Council on Thursday.
“Given the market’s high expectations for a further rate cut in September, the ECB should be transparent about the conditions for a further rate cut to help the market manage its expectations, which is not easy in a context of high uncertainty in the world, particularly in the United States,” said Patrick Barbe, head of investment grade fixed income in Europe at Neuberger Berman.
If a status quo on the “rent” of the Euro is enacted, any element of language allowing the timetable for the next decisions of the Bank based in Frankfurt to be refined will be dissected by the market.
Martin WOLBURG, Senior Economist at GENERALI INVESTMENTS, anticipates the ECB’s stance: “The persistence of high inflation in the services sector, combined with the recent increase in wage growth, will prompt the Governing Council to remain cautious. The ECB’s communication led us to conclude that further easing measures will need to be tested with the update of the macroeconomic outlook scheduled for September. We expect Ms. Lagarde to adopt a dovish wait-and-see attitude at the press conference.”
On the value side, Pernod Ricard finished at the top of the CAC 40, gaining 3.4% after announcing the sale of its portfolio of foreign wines to the consortium of investors Australian Wine Holdco Limited. Essilorluxottica lost 4.45%, the market showing skepticism after the optical group announced the acquisition of the streetwear brand Supreme for 1.5 billion dollars.
Across the Atlantic, major stock indices ended Wednesday’s session in mixed order, with the Dow Jones gaining 0.59% and the Nasdaq Composite falling 2.77%. The S&P500, a benchmark barometer of risk appetite in the eyes of fund managers, lost 1.39% to 5,588 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 $1,0930. 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 as a priority the outcome of the ECB Governing Council (monetary policy decision at 2:15 p.m., press conference at 2:45 p.m.), and across the Atlantic, the weekly unemployment benefit registrations and the Philly Fed manufacturing index at 2:30 p.m.
KEY GRAPHIC ELEMENTS
The technical situation remains extremely fragile in the short term, with volatile oscillations expressed in a tidy 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. The probabilities of a bottom exit from the tidy are stronger than those of an exit upwards, due to the volumes and volatility at the entry on June 13 and 14.
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.
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