CAC 40: Reaction from NVidia and crude, ECB and US producer prices under the microscope

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In the wake of the Shepherd’s star of the markets, NVidia (+8.15%), the CAC 40 is expected to rise sharply this Thursday, even as the ECB’s Governing Council is ending, which should result in a new cut in key rates. However, yesterday, in the wake of the publication of contrasting American inflation figures, the Paris market ended in the red (-0.14% for its flagship index, below 7,400 points).

Regarding the consumer price indices for the month of August, the dynamics of which increased by 0.3% excluding food and energy, against a target of +0.2%. No surprises, however, regarding prices in the broadest product range, which slowed very markedly on an annual basis, to +2.5%, in line with expectations. Enough to leave the door open to a first federal rate cut of 50 basis points on September 18. This scenario is estimated at a 17% probability of realization according to the CME Group’s FedWatch tool, compared to 83% for a first cut of 25 basis points.

These figures give credence to a cut in the Fed’s key rates of 25 basis points (0.25 percentage points), with the market currently assessing the probability of such a scenario at 85% against 66% the day before, according to the CME FedWatch tool.

See you on September 18 for the outcome of this historic FOMC. In the meantime, it is the ECB that has an appointment with the markets this Thursday. “Barring a huge surprise, the ECB should proceed with its second rate cut after that of June, and it has a “favorable” context to do so”, notes Alexandre Baradez (IG France), who lists “overall inflation in the euro zone […] “the medium-term inflation expectation in the euro zone (5Y5Y) fell to 2.2%, its lowest level since July 2021″ […] is now moving below 2.10%, the lowest level observed since October 2022”, “the sluggish growth of the eurozone compared to American growth”, or even “the fall in investor sentiment in the zone in September to an 8-month low”.

In the values, values ​​section, Axa gained 0.5% while Bank of America reiterated its buy opinion, judging that the stock deserves an appreciation of its stock multiples. It believes that the stock should be able to break the ceiling of a price above 10 times expected earnings per share (“it should not be a taboo”). Outside the CAC 40, the specialist in prepaid service titles Pluxee dropped 8%, penalized by JPMorgan which lowered its advice from “outperform” to “neutral”. Ubisoft drank the chalice to the dregs, and lost another 9.4% this Wednesday evening. The video game publisher’s stock this time suffered from a downgrade and the poor performance of Star Wars Outlaws, the latest title launched by the video game publisher.

On the other side of the Atlantic, the main stock indices ended Wednesday’s session in the green, like the Dow Jones (+0.31%), but especially the Nasdaq Composite (+2.17%), driven by NVidia. Finally, the S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.07% to 5,554 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 $1,1020. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around $67.90.

On the agenda this Thursday, to follow in priority the producer prices in the United States at 2:30 p.m., and the press conference of the BCE at 2:45 p.m., following its monetary policy decision at 2:15 p.m.

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 identified, our opinion is neutral on the CAC 40 index in the short term.

It should be noted that a crossing of 7465.00 points would revive buying tension. While a break of 7200.00 points would revive selling pressure.

Hourly data chart

Daily Data Chart