CAC 40: New twist in the race for the White House

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The global outage that affected some users of Microsoft services will not, fortunately, have had any adverse cascading effects, and on the stock market in particular, the reaction will have been very limited. Except perhaps in the particular case of Crowdstrike (-11.10%), the cybersecurity company cited by name by Microsoft in its communications, and at the origin of the “crash” during an update procedure. In the end on Friday, the CAC will have contracted by only 0.69% to 7,534 points, still during a trading range within which the nervousness of the operators is expressed.

The session was marked by three new “warnings”, immediately severely punished. This is the case of Ubisoft, which dropped 14% after giving the market lower-than-expected outlooks for its second quarter. But the biggest drop in the SBF 120 index was Sartorius Stedim Biotech, which fell 16.3% after lowering its 2024 targets. Same scenario and same punishment for Sopra Steria, which returned 7.9%, after reducing its organic growth target for 2024.

To be complete in terms of values, we will note the amplification effect of the automotive equipment sector, whose main representatives in Paris suffered on Friday, like OPMobility (ex Plastic Omnium) (-3.51%), Valeo (-6.88%) and Forvia (-7.77%).

In the absence of major statistics, operators digested the ECB Governing Council, which ended the day before. The meeting ended, unsurprisingly, with a status quo on the key rates themselves, with a review clause at the start of the school year. The ECB had initiated, following in the footsteps of the Fed, the reduction in rates at the beginning of June. For the time being, the rent of the Euro is on hold.

Martin WOLBURG, Senior Economist at GENERALI continues “to envisage further rate cuts. We expect the next 25 basis point cuts in September and December, which will bring the deposit rate down to 3.25% by the end of the year, in line with markets. However, Ms Lagarde’s reluctance to raise expectations for a rate cut in September suggests that the risk of no action has increased somewhat. Markets were not surprised by yesterday’s decision, which had already been announced by the Board members in recent weeks.”

On the other side of the Atlantic, the main stock indices ended the last session of the week in the red, like the Dow Jones (-0.93%) and the Nasdaq Composite (-0.81%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.71% to 5,505 points. The main political news of Sunday was the announcement by Joe Biden of his withdrawal from the race for a second term. The current vice-president, Kamala Harris, is in a strong position to represent the Democratic camp.

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 $1,0890. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $80.60.

There are no major figures to report on the agenda for Monday.

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 7700.00 points.

Hourly data chart

Daily Data Chart