(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 CAC 40 ended Thursday’s session in the red (-0.26% at 7,247 points), far from the session’s low points, limiting the damage thanks to a reassuring figure on employment, 6 days after the publication of a monthly NFP report which had then chilled the atmosphere.
Weekly jobless claims were released yesterday, at 233,000 new units, compared to a consensus of 241,000, and a previous week of 250,000.
However, we should not cry victory too quickly, warns Florian Ielpo, head of macroeconomic research at Lombard Odier IM: “It is difficult to read a significant message in these data. This latest figure remains consistent with the recent upward trend in allocation requests: the enigma of the Sahm rule therefore remains unsolved.”
The Sahm rule links the unemployment rate to the risk of recession in the United States. It assumes that the U.S. economy is entering a recession when the average of the last three months of the unemployment rate is 0.5 percentage points (50 basis points) or more higher than its lowest level in the last twelve months.
As a reminder, regarding Non Farm Payrolls, 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.
In terms of value, tech was struggling, like Ubisoft (-2.69%), XFab (-2.85%), OVH (-3.41%), Wordline (-3.82%), Teleperformance (-4.47%), and Soitec (-4.52%).
On the other side of the Atlantic, the main stock indices reacted, especially on tech. Also, while the Dow Jones gained 1.76%, the “Composite”, with a strong technological coloring, rebounded by 2.87%. The S&P500, a reference barometer of risk appetite in the eyes of fund managers, gained 2.30%.
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 $1,0930. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $75.30.
On the agenda this Friday, no major figures appear. It should be noted that the unemployment rate in France has slightly decreased according to the latest INSEE data, to 7.3% of the active population.
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.
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.
