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Although closing in the green on Monday, September 8 (+0.99%), the CAC 40 remains well below 7,465 points, a major resistance level that is putting pressure on prices. Operators continue to digest the figures from the latest federal employment report for August, figures that send unclear signals on the trajectory of the American economy, while the Fed will complete a new Monetary Policy Committee on September 18.
a historic meeting since it should end, barring a huge surprise, with the start of a reduction in federal rates. The central question that remains is the extent of this first loosening of the monetary tap: 25, or 50 basis points?
On Friday, the monthly report on private employment in the United States, without being catastrophic, revived doubts, to the point of weighing heavily on Wall Street, more particularly on the technological side of the stock market.
Because if the unemployment rate remains stable at 4.2% of the active population, the number of job creations in the private sector (excluding agriculture) comes to 142,000, well below the target. So, of course, the result is not as bad as in July (114,000), but it rekindles the debate on the nature of the landing of the American economy. In other words, the soft landing, and a fortiori the kiss landing, is no longer so relevant. Finally, the average hourly wage, at +0.4%, exceeds the consensus.
“The August employment report, so eagerly awaited by the markets, did not provide a definitive answer on the extent of the slowdown in the American labor market. This leaves open the question of whether the Fed will begin to reduce its rates next week with a classic cut of 25 basis points (0.25 percentage points), or a more aggressive cut of 50 basis points (0.5 percentage points),” judges Xavier Chapard, strategist at LBPAM.
In terms of statistics on Monday, there was little to get our teeth into. Investors took note of the Sentix investor confidence index, down to -15.4, missing expectations that were already pessimistic. Naturally, Germany weighs heavily in this score.
“The drama surrounding the German economy is heading towards a new climax in September. The recession is raging ever more strongly. Even the eurozone as a whole is struggling with dangerous recessionary tendencies because of Germany. The situation in the rest of the world is also deteriorating, but investors there are a little more optimistic in their expectations,” according to the specialist behavioural finance firm.
Finally, let us note that 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 initially, then get down to drawing up a budget for France.
On the value side, Kering suffered the biggest fall in the CAC 40 on Monday evening, falling 2.5%. The luxury group was penalized by two downgrades, from Royal Bank of Canada (to “sector performance”) and Barclays (to “underweight”). Ubisoft returned 7.1% while Cantor Fitzgerald lowered its recommendation on the stock, going from “overweight” to “neutral”. On the upside side, SMCP rebounded by 7.7%, sought in reaction to a court decision favorable to the creditors of the “accessible luxury” specialist.
On the other side of the Atlantic, the main stock indices are in the green, such as the Dow Jones (+1.20%) and the Nasdaq Composite (+1.16%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, rose by 1.16% to 5,471 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 $1,1030. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $67.90.
On the agenda this Tuesday, to follow in priority the Italian industrial production at 10:00 and the NFIB index of American small businesses at 12:00.
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 the 7,465 points below which a new bearish leg would form. This last level experienced a first alert on Thursday, September 5.
The fact that the leading French index ended at the lowest level of week 36, just after breaking the threshold, is decisive. It sends a message of short-term weakness.
The key threshold to watch is 7,465 points, below which the opinion will remain negative.
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 7465.00 points.
The News Bulletin 247 council
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