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Gauging the risks of a flare-up in the Middle East, and taking note of a marked slowdown in American industrial activity, operators opted for continued profit-taking on the Paris Stock Exchange on Thursday, with the CAC 40 losing 2.14% to 7,370 points, its lowest closing price since January 23.
In terms of statistics, weekly registrations for unemployment benefits were 249,000 new units, slightly above expectations. The ISM manufacturing PMI came out at 46.8, 2 points below the consensus. As a reminder, a score below 50 means a contraction in the sector in question.
On this side of the Atlantic, the manufacturing PMI came out slightly higher than the first estimates, at 45.8, thanks to the German component, which finally came out at 43.2 points. Disappointing but less than in the very first estimates.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: “There is little hope for a rebound in demand soon, with new orders falling for the 27th consecutive month in July, and at a faster pace than in June. Eurozone manufacturers are also less optimistic about an increase in activity in the year ahead, with confidence below its long-term average, and weak growth prospects have led to an acceleration in job cuts.”
On the value side, the publication of Société Générale made teeth grind (-9%), the retail bank in France having disappointed again. The company also lowered its projection of net interest margins in France for 2024. On the contrary, Crédit Agricole SA gained 0.6% after having delivered solid accounts in the second quarter.
Outside the CAC 40, Worldline collapsed (-15.3%) after lowering its 2024 targets, citing uncertainties over consumption in Europe. Eurobio Scientific jumped 34.9%, driven by a proposed public takeover bid (OPA) by a consortium, which should result in the in vitro diagnostics specialist being delisted.
On the other side of the Atlantic, the main stock indices ended Thursday’s session sharply down, like the Dow Jones (-1.21%) and especially the Nasdaq Composite (-2.30%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 1.37% to 5,446 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 $1,0820. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $78.20. A barrel in strong rise with geopolitical tensions heightened in the Middle East, but an increase which was capped by the publication this morning by a contraction in industrial activity in China, a first in nine months.
On the agenda this Friday, to follow in priority the monthly federal NFP report on the health of American private employment in July, at 2:30 p.m. Here are the different consensuses: a stable unemployment rate at 4.1% of the active population, 176,000 job creations in the non-agricultural private sector, and a monthly increase in average hourly wages of +0.3%.
KEY GRAPHIC ELEMENTS
The leading index of the Paris market has broken the graphic level of 7,465 / 7,500 points, a floor weakened since June 14. The selling energy released is significant, in light of the inability to fill the opening gap, and in light of the increasing transaction volumes. The message delivered is negative. For the time being, the index remains magnetized by 7,465 points, a level which corresponds to the lower limit of a former gap (01/26). At the time, LVMH excited the market with an excellent quarterly copy. A market which is in a completely different psychological state this summer.
On Wednesday, July 31, the index completely filled the downward gap of July 24, bringing additional heaviness to the short-term configuration.
On Thursday, August 1, it broke through 7,465 points, closing at the session base points.
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 7465.00 points.
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