CAC 40: American employment, a patient under surveillance

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In just two sessions, the CAC 40 index crossed the amplitude defined by 7,465 points on the one hand, and 7,690 points on the other hand, respectively intermediate support and resistance. The bout of weakness, during the session yesterday, and mainly on gap today, is explained by a resurgence of fears about the health of the American economy, after the publication at the beginning of the week of a disappointing industrial barometer.

The CAC 40 lost 0.98% yesterday to close at around 7,500 points.

It is now towards employment that operators will turn for the rest of the week. The Fed is naturally very dependent on this data on the labor market and as a reminder, the July NFP had very strongly disappointed. We will have to wait until Friday to see this Non Farm Payrolls report, for the month of August.

Here are the main expectations: 164,000 job creations in the private sector (excluding agriculture), an unemployment rate down to 4.2% of the workforce and an increase in average hourly wages to 0.3%. By Friday, we will have a few “foretaste”, with the weekly registrations for unemployment benefits this Thursday, as well as the survey by the ADP firm. Yesterday, new job offers (JOLTS) came out at 7.67 million, against 7.91 million in June, according to the Jolts report. The consensus of economists surveyed by the Wall Street Journal was at 8.1 million. This statistic gives a little more credence to the hypothesis of a rate cut by the American Federal Reserve (Fed), in two weeks.

In terms of values, luxury, a sector dependent on the economic situation, suffered. LVMH lost 4.22% to 642.6 euros, Hermès lost 3.84% to 2,081 euros and Kering dropped 2.22%. The CAC 40 was, however, able to count on defensive values, such as Sanofi (+1.5%), Danone (+1.2%) and Orange (+1%).

On the other side of the Atlantic, the main stock indices ended the session in a mixed order, with the Dow Jones managing to gain 0.09% and the Nasdaq Composite dropping another 0.30%. The S&P500, a benchmark barometer of risk appetite in the eyes of fund managers, ended close to balance at 5,520 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 $1,1080. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $69.00.

On the agenda this Thursday, follow at 2:15 p.m. the survey by the private HR firm ADP on American employment, at 2:30 p.m. the weekly registrations for unemployment benefits and at 4:00 p.m. the ISM Services index.

KEY GRAPHIC ELEMENTS

Key short-term chart levels were precisely hit: Friday, August 30 at 7,645 points, followed by a failure; and Wednesday, September 4 at 7,482 points, a handful of points from 7,465 points below which a new bearish leg would form.

FORECAST

Considering the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.

It should be noted that a crossing of 7690.00 points would revive buying tension. While a break of 7465.00 points would revive selling pressure.

Hourly data chart

Daily Data Chart