(News Bulletin 247) – A small lull is looming, between two bearish leg formations, in the still tense context of the war in Ukraine and its consequences, deep but still difficult to read, in the short, medium and long term. In any case, we are experiencing “a shift in history”, in the words of the French Minister for Europe and Foreign Affairs, Jean-Yves Le Drian.
A slight lull which is also maintained by the comments of J. Powell before the American Parliamentarians on the rate of rise in federal rates, suggesting that the rise would probably be less strong than expected. The way is thus open to an increase of 25 bps, instead of 50 bps for this next deadline. The Fed will end a new meeting of its Monetary Policy Committee (FOMC) on March 16.
It must be said that the question of the potential slowdown in global growth, in a high inflationary context, energy in mind, completely reshuffles the cards for the big money-makers of the planet. “In this context, central banks should be more cautious and more accommodating, particularly in Europe, in the face of the risks weighing on growth. At the same time, inflation therefore appears to be less under control knowing that it could increase significantly case of an acceleration of sanctions on the energy front, again leading to the risk of a slowdown in activity”, explain Jean-Marie MERCADAL, Director of Investment Strategies and Eric BERTRAND, Deputy CEO and Chief Investment Officer at OFI AM.
And this even though the horizon is particularly foggy. “A stalemate and an aggravation of the conflict could lead to a phase of economic slowdown coupled with high inflation raising fears of a period of stagflation. Central banks are not finished being at the center of the markets”.
In terms of statistics, once again relegated to the background, EuroStat published the latest inflation figures in the Euro Zone, above expectations, at +2.7% at an annualized rate, excluding a basket of volatile elements (food , energy, alcohol and tobacco). Across the Atlantic, operators took note of the results of the survey by the private firm ADP on American employment in February. This “taste” before the results of Friday’s Non Farm Payrolls report shows job creations in the private sector (excluding agriculture) of around 475,000, well above the target.
On the values ​​side, TotalEnergies, yet threatened with having to follow in the footsteps of its counterparts BP, Shell or Chevron by not only stopping any new project, but potentially abandoning its current investments in Russia, rebounded 8.17% to 47.975 euros. Societe Generale (+0.26%), very established in Russia, stabilized the bleeding. Airbus and Safran took over 5.3% and 4.9% respectively. Investors also reacted rather well to the presentation of Stellantis’ strategic plan (+1.1%), which notably announced that it wanted to launch 75 electric models by 2030 for its brands including Peugeot, Opel, Fiat, Alfa Romeo or Maserati. On the contrary Thales, driven in recent sessions by the enthusiasm for defense values, fell 4.90% to 102.90 euros.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in the green, lifted equally by all sectors or record styles: the Dow Jones gained 1.79% to 33,891 points, and the Nasdaq Composite 1.62% at 13,752 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.86% to 4,386 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.1100. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $114.00.
To be followed in priority, on the agenda this Thursday, the PMI Services indicator in the Euro Zone in final data for February at 10:00 a.m., and across the Atlantic, the weekly registrations for unemployment benefits at 2:30 p.m., the PMI Services ISM at 4:00 p.m., and the following the semi-annual hearing of the Chairman of the Fed before the Senate, also at 4:00 p.m.
KEY GRAPHIC ELEMENTS
The 6,760 points, which we have identified so far as a gradually weakened floor, gave way, on a wide gap, opening the way to a new market phase. Recall that the index traced from February 16 to 18 a combination of candles in three crows. This combination was immediately followed by a very significant bearish engulfing structure, accompanied by volumes that were far from timid for a session, let’s not forget, without American benchmarks due to a public holiday. The last phase of weakening of the aforementioned support will therefore have been aggressive. Friday’s pullback was surgically precise. A phase of high volatility begins. The school marubozu drawn on Tuesday 01/03 is a first step.
FORECAST
In view of the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that a crossing of 6760.00 points would revive the tension in the purchase. While a break of 6385.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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