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The CAC 40 index managed to gain a few points on Tuesday, with the relief caused by the publication of American producer prices.
The data published on Tuesday indeed show a decrease in inflationary pressures on the producer side. The wholesale price index actually rose by 0.1% in July, which is lower than the market consensus which was counting on a rise of 0.2%. Year-on-year, producer prices rose by 2.2% last month, against a rise of 2.7% in June.
The small 0.1% increase in the producer price index in July “is not as good as it looks, but it is nonetheless consistent with core PCE prices, the Fed’s preferred measure, rising at an annualized rate of less than 2%,” says Paul Ashworth of Capital Economics.
It is therefore in a still tense atmosphere that operators will learn about consumer prices across the Atlantic this Wednesday. CPIs, for the month of July, excluding food and energy, are expected to increase by 0.2% on a monthly basis.
As a reminder, the latest federal employment report (NFP for July), as well as a leading indicator of industrial activity, froze the mood in the markets two weeks ago. Trading rooms, excessive by nature in their reaction, began to imagine a passage through the recession box of the largest economy on the planet.
In response, Ms Ballin, Bond Manager at Auris Gestion, notes that “central bankers have not been idle over the past week. Faced with the wave of panic that has spread across the markets, they have carried out a series of interventions in order to calm investors.”
“First we had Mary Daly (President of the San Francisco Fed) who said that an adjustment in monetary policy would happen soon and that there was no cause for alarm. She also insisted that the jobs market is slowing but not collapsing. The rise in the unemployment rate, she said, is largely due to an increase in the number of workers, particularly immigrants, and not to widespread and permanent layoffs.”
On the value side, Valneva finished at the top of the SBF 120, thanks to a rise of 7.8%. The laboratory confirmed its annual outlook after returning to profits in the first half. GTT gained 5.2%, benefiting from an increase in opinion from Berenberg which moved to buy on the stock with a price target of 155 euros.
Planisware appreciated by 5.4%, while the software publisher will be included, at the end of the month, in the MSCI World Small Cap index, just like Clariane (+6.6%) and Rémy Cointreau (-2.5%). On the other hand, GL Events will be excluded, which explains the heavy decline in the stock of the event specialist (-7.4%).
On the other side of the Atlantic, the main stock indices ended Tuesday’s session in the green, like the Dow Jones (+1.04% to 39,765 points) and the Nasdaq Composite (+2.43% to 17,187 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, rose 1.68% to 5,434 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 $1,0930. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $78.10.
On the agenda this Wednesday, the main focus is consumer prices in the United States at 2:30 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. The very clear price/volume divergence in week 32 is cause for concern.
On the scale of the upcoming session, however, a continuation of the buying reaction is expected.
FORECAST
Considering the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is trading above the support at 7200.00 points.
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