CAC 40: US employment is the statistical highlight of the week

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The market remained cool to the appointment of Michel Barnier to Matignon. The former minister of François Mitterrand, Jacques Chirac and Nicolas Sarkozy, former European Commissioner, succeeds Gabriel Attal. The septuagenarian will have to demonstrate his negotiating skills – let us recall that he was in charge of Brexit negotiations in Brussels – to form his government first, then get down to drawing up a budget for France.

The CAC 40 index lost 0.92% yesterday to 7,431 points, falling back below the technical level of 7,465 points. Investors only have eyes for American employment, the arbiter of this second part of the week. The federal report on American employment for the month of August will be published this afternoon at 2:30 p.m. And the “foretastes” distilled since Wednesday (new JOLYS job offers, unemployment benefit registrations, ADP survey) have not been very encouraging.

These figures are basically legitimate after years of high rates, but what is underlying is the Fed’s ability to respond to them by the end of the year. In two weeks, the FOMC that it will convene will result in a first reduction in the remuneration of Fed Funds. -25 bps is the option that is currently holding the rope in a market that is secretly waiting for -50…

In terms of values, one sector seems to be doing well after Michel Barnier’s appointment to Matignon: banking, like its main representatives on the Parisian stock market, Crédit Agricole (+1.25%), Société Générale (+2.42%) and BNP Paribas (+2.73%). But the CAC 40 was especially penalized by the decline in luxury stocks, with LVMH losing 3.6% and Hermès 6.4%. “For the moment, the tide is clearly against this sector, and the selling news from China is not good. Every day a new stock suffers particularly and today it is Hermès which had held up well until now,” explains a sector analyst.

Reassured by an ISM services index very close to expectations, the main equity markets across the Atlantic closed in a scattered order, close to equilibrium, like the Dow Jones (-0.54%) and the Nasdaq Composite (+0.25%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, closed slightly down 0.30% on 5,500 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 $1,1120. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $69.00.

On the agenda this Friday, to follow in priority the revised GDP data in the Eurozone at 11:00 and the NFP (non Farm Payrolls) report for the month of August at 14:30. Here are the main expectations: 164,000 job creations in the private sector (excluding agriculture), an unemployment rate down to 4.2% of the active population and an increase in average hourly wages to 0.3%.

KEY GRAPHIC ELEMENTS

The 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. This last level experienced a first alert on Thursday, September 5. The weekly closing will therefore be decisive. We will know the verdict this evening, after the publication of key figures on American employment.

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