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After a half-hearted rebound on Wednesday (+1.91% to 7,266 points), the CAC 40 is expected to resume its downward path at the opening on Thursday, while the level of weekly unemployment benefit registrations will be scrutinized. Let us recall that one of the main reasons for the air pocket experienced by the markets since the end of last week is the fear of the United States entering a recession, instead of a soft landing. A scenario catalyzed among other things by the very disappointing content of the federal employment report for July.
As a reminder, 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.
The US employment report for August “will probably be the determining factor in the rate cut trajectory,” Lombard Odier said. “This could be either 50, 25 and 25 basis point cuts in September, November and December respectively, or three rounds of 25 basis point cuts,” the asset manager continued.
The leading French index has nevertheless regained a small breath of fresh air, after a rebalancing of the Japanese stock market, which experienced a historic dip at the start of the week. And this is thanks to the latest statements by the deputy governor of the Bank of Japan. He indicated this Wednesday morning that there will be no “rate hike” given a context of instability in the financial and capital markets. These accommodating announcements have caused the yen to fall again, which is good news for Japanese exporting companies.
In terms of values, Teleperformance gained 3.7% after having lost nearly 15% over the last four sessions. Cyclical values ​​are also benefiting from this return to calm on the markets. Schneider Electric gained 3.3%, while Totalenergies (+2.9%) benefited from the rebound in oil prices. The latter are driven by disruptions in a major oil field in Libya and tense geopolitical news in the Middle East.
On the other side of the Atlantic, the red is already back, with the Dow Jones having lost 0.60% yesterday to 38,763 points, and the Nasdaq Composite 1.05% to 16,195 points. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, depreciated by 0.77%, falling back below 5,200 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 $1,0940. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $75.10.
On the agenda this Thursday, to follow as a priority the weekly registrations for unemployment benefits in the United States at 2:30 p.m. and the final data on wholesale stocks at 4:00 p.m.
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.
This level of 7,465 points corresponds to the lower limit of a former gap (26/01). At the time, LVMH excited the market with a quarterly copy of excellent quality. Market which is in a completely different psychological disposition 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 again the 7,465 points, with closing on the low points of the session, triggering the formation of a new bearish leg. This leg is in full expression phase.
The timid reaction of Wednesday 07/08 should give way, due to lack of conviction, to a continuation of the clearances. It will be essential to observe, in addition to the volumes, the participation of this or that sector in the decline.
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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