CAC 40: Unrest in the Middle East after a Symposium in the Green

KEY GRAPHIC ELEMENTS

Investors are finally set after this long-awaited macroeconomic meeting in Jackson Hole. Indeed, the chairman of the US Federal Reserve, Jerome Powell, has affirmed that the time has come to cut interest rates in the United States. The next Fed vote will take place in mid-September, six weeks before the US presidential election. Jerome Powell has signaled that he is ready to cut US interest rates in September. Already, traders are focusing on betting on the size of this first reduction and on the future trajectory of easing. For the whole of 2024, rates on swap contracts linked to central bank policy meetings point to a total reduction of around 1 percentage point. Another encouraging signal concerning the macroeconomy: inflation expectations are becoming increasingly favorable to monetary easing, particularly in Europe. Gauges of long-term inflation expectations in Europe hit their lowest level in nearly two years, a sign that investors believe central banks can continue to cut interest rates without risking a surge in price pressures. One downside this morning was oil, which rebounded sharply on Friday as the Israeli military launched a wave of airstrikes in southern Lebanon early Sunday in what it called an attempt to thwart a “large-scale attack” by the militant group Hezbollah. Hezbollah, meanwhile, said the group had shortly after launched more than 340 Katyusha rockets and a large number of drones at 11 military targets in northern Israel and the occupied Golan Heights. Separately, Yemen’s Houthis apparently deliberately blew up a tanker carrying 150,000 tons of crude oil. The crew of the Sounion was rescued by a French navy ship on Thursday. The ship had been left adrift after a series of attacks by the Houthis the day before. The Sounion’s 150,000-ton cargo would represent approximately 1 million barrels. On the stock market side, we will pay particular attention to Fnac Darty this morning. Indeed, Consob, the Italian stock market watchdog, approved the proposed purchase of the leader in the distribution of electronics and household appliances in Italy, called Unieuro. A few statistics will liven up the session today, notably the IFO business climate index in Germany expected at 10:00 a.m. and then durable goods orders in the United States at 2:30 p.m.

Technical Section: The Paris index continues its bullish path and begins to return to the upward direction the moving averages adding more probabilities in the continuation of the rebound. Nevertheless, the index could consolidate towards its 50-period moving average and its first support level in order to rebuild a healthy base before continuing its rise.

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 7690.00 points.

Hourly data chart

Daily Data Chart