(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.
The mood is getting heavy on the Paris Stock Exchange, where the week got off to a very bad start, with the CAC 40 losing 1.42% on Monday to 7,149 points, after having flirted dangerously, at the lowest point of the session, with the highly symbolic threshold of 7,000 points. We have here the intermediate support, a type of safeguard, for our flagship index, which is suffering from fears of the United States entering a recession, instead of the scenario idealized until now of a soft landing.
Everything accelerated on Thursday, with the publication of an activity indicator (ISM manufacturing), two points below expectations that were themselves pessimistic, and on Thursday, with a report on employment that was particularly disappointing, notably on the job creation front, and the surprise increase in unemployment, to 4.3% of the active population. On Wall Street, the penalty was heavy, notably on technology companies that are just coming out of a quarterly ball that was, to say the least, contrasting.
Earlier in the day on Monday, Asian markets had a black day. Including the Tokyo Stock Exchange and its flagship index, the Nikkei, which lost 12.4% on Monday to 31,458.42 points, suffering its biggest drop in a single session. This decline was amplified by the appreciation of the yen, which is not in favor of exporting companies.
In this context, the publication of the ISM services index in the United States was eagerly awaited after the disappointment in the manufacturing component on Thursday. Finally, activity in the services sector in the United States remained expanding in July with an ISM index that stood at 51.4 points compared to 48.8 points in June. This is a small glimmer of hope in the midst of statistics signaling a deterioration in the world’s leading economy.
On the value side, out of the 40 values ​​making up the Parisian star index, 38 closed in the red, including Teleperformance (-5.4%), STMicroelectronics (-4.1%) and Renault (-3.8%) for the biggest drops. Among the only two survivors of the day, L’Oréal (+1%) which announced the acquisition of a 10% stake in the Swiss pharmaceutical group Galderma for an undisclosed amount.
On the other side of the Atlantic, the main stock indices ended Monday’s session in the red, like the Dow Jones (-2.60%) and especially the Nasdaq Composite (-3.43%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 3.00%, moving ever closer to the symbolic threshold of 5,000 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 $1,0950. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $73.60.
On the agenda this Tuesday, to follow in priority the retail sales in the Eurozone at 11:00, and the trade balance in the United States at 14:30.
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 lows, triggering the formation of a new bearish leg. This leg is in full expression phase.
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.
