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New session of volatility within a tidy for the CAC 40 on Monday, the flagship French index having recovered 1.16% to 7,622 points, in starving volumes, in the absence of a sharp statistical benchmark. Operators are dealing with a new twist in the race for the White House: JR Biden’s renunciation of running for a second term, and his support for his current Vice President, Kamala Harris.
“For the markets, this casts doubt on the bets that almost gave for granted that Donald Trump would be elected, which had given a boost to risky assets, in particular because of the potential new tax cuts,” judges Sebastian Paris Horvitz, of LBPAM. “Of course, the new situation could induce a little volatility in the short term,” he adds.
The market was driven in particular by stocks with a strong amplification effect in this volatile period, in technology or automotive equipment. Thus, Soitec gained 2.96%, STM 2.86% and OVH 4.41%. Valeo was very well oriented (+3.20%), as was Forvia (ex-Faurecia) (+4.38%).
No major macroeconomic figures were on the agenda on Monday. We will have to wait until this afternoon for a return of statistical benchmarks, with for the United States, the manufacturing index of the Richmond Fed and sales of existing homes.
Other major indicators will be published this week, including the US GDP for the second quarter on Thursday, and the PCE index in the United States, the Federal Reserve’s preferred gauge for measuring inflation, the following day.
But the main part of the menu will be made up of a wave of quarterly results, since no fewer than 25 CAC 40 companies will publish their first half results this week, including 13 on Thursday, July 25 alone.
On the other side of the Atlantic, the main stock indices ended the first session of the week in the green, like the Dow Jones (+0.32%) and the Nasdaq Composite (+1.58%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.08% to 5,564 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 $1,0890. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $78.20.
On the agenda this Tuesday, to follow in priority the manufacturing index of the Fed of Richmond and the sales of existing housing at 4:00 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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