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The last two weeks, with the Olympic fortnight, have been sporty on the financial markets, which have suffered exacerbated volatility, as investors realize that the idealized scenario of a soft landing for the American economy may not correspond to reality. An ISM manufacturing index, and an NFP employment report, both very disappointing, have passed through there.
Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM, imagines a “return to calm after an episode of extreme volatility amplified by the unwinding of carry trade and short positions”. The question that remains is how long this volatility will last. The macroeconomic program can give us some clues.
This Monday, no major figures are on the agenda. The agenda will get denser next week with producer prices on Tuesday, consumer prices on Wednesday, retail sales on Thursday, and consumer confidence (U-Mich) on Friday.
The Paris Stock Exchange ended this difficult week on a positive note. The CAC 40 rose by 0.31%, to 7,270 points at the close on Friday evening, after having nevertheless erased a good part of its gains from the end of the morning (+1% to 7,319.51 points) in the wake of a mixed opening on the New York Stock Exchange.
In terms of values, Eutelsat finally ended down 2.1% in reaction to the publication of its 2023-2024 annual accounts. Excluding publications, Esker gained 9.2%, climbing on information from Bloomberg, according to which the British investment fund Bridgepoint is considering making a takeover bid for the Lyon group. Soitec lost a further 2.14% on Friday after falling 4.52% the day before, in last place in compartment A of the stock market.
On the other side of the Atlantic, the main stock indices ended Friday’s session very slightly up, in contracting volumes, like the Dow Jones (+0.13% to 39,497 points) or the Nasdaq Composite (+0.51% to 16,745 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.47% to 5,344 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 $1,0920. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $76.30.
Tokyo remained closed on Monday due to a public holiday.
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 sell-offs. It will be essential to observe, in addition to the volumes, the participation of this or that sector in the decline. The very clear price/volume divergence over week 32 is intriguing.
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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