(News Bulletin 247) – This article, freely accessible, is produced by the News Bulletin 247 stock market analysis and strategy research team. To not miss any opportunity, consult the full analyses and discover our portfolios by accessing our Privileges area.
Bad news is no longer Good news… While until now, any macroeconomic statistics that could suggest a cooling of the American economic machine were interpreted as favorable to the market, because they invited the Fed to ease its monetary policy, a recent series of disappointing figures has not been to the taste of operators who read, at face value, a weakening of the world’s leading economy. Already on Thursday, the publication of the ISM manufacturing index, well below 50 points and missing the target by 2 points, had caused tension. The nail was hammered home on Friday with the publication of the NFP (Non Farm Payrolls) report on American private employment.
Regarding this report, which is closely followed: the unemployment rate rose significantly, to 4.3% of the working population, and job creation collapsed in July, to 114,000. “This very mediocre job report corresponds fairly broadly to the ‘unexpected weakening of the labor market’ that Fed Chairman Jerome Powell has been talking about for several months and which would be a justification for rushing rate cuts. The unemployment rate is now significantly above what Fed members have forecast for the end of the year and a rate cut of 50 basis points (0.50 percentage point, Editor’s note) in September can no longer be ruled out,” explains Bastien Drut, head of strategy and economic studies at CPRAM.
Markets were already under pressure before this employment report, disappointed by the generally worse-than-expected results of the American technology giants.
In terms of values, the last residents to reveal their half-yearly financial statements, Engie and Axa, passed the test with flying colors. The energy company gained 2.8%, after raising its 2024 outlook and announcing a return to profits in the first half of the year at 1.9 billion euros. The insurer gained +1.4%, driven by results deemed solid by the market, with a 5% increase in its net profit to 4 billion euros.
STMicroelectronics returned 5.6%, weighed down by disappointing announcements from American Intel, which revealed quarterly accounts in the red. At the forefront of fears about the economy, banks took a hit the day after their quarterly results. Crédit Agricole dropped 5.6% and Société Générale fell by 5.9%.
On the other side of the Atlantic, the main stock indices plummeted on Friday, with the Dow Jones losing 1.51% and the Nasdaq Composite falling by 2.33%. The S&P500, a benchmark barometer of risk appetite in the eyes of fund managers, contracted by 1.84%.
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 $1,0920. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $72.60.
On the agenda this Monday, the final data of the PMI services in the Eurozone this morning, then the producer price index in the Eurozone at 11:00. The ISM services will be published, for the United States, at 16:00, and will be closely watched after the air pocket suffered by its manufacturing counterpart last Thursday.
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 session lows, triggering the formation of a new bearish leg.
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.
The News Bulletin 247 council
Hourly data chart
Daily Data Chart
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
