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By achieving a bullish extension on Friday, with the support of luxury goods but also automotive equipment, the Parisian market confirmed its good dispositions. The crossing of 7,700 points is now fully validated. Over the course of the week as a whole, the flagship Parisian index gained almost 4%, thanks in particular to its locomotive LVMH (+18.84%!). The catalyst for this outbreak? The announcement by the Chinese authorities of the formalization of measures to support consumption.
Other files in the luxury sector, naturally very exposed to the Chinese market, have exploded upwards, such as Kering (+18.4%), Hermes (+15.6%), or Christian Dior (+ 19%). The automotive equipment sector benefited from an impressive catch-up effect over the week, like its main representatives on the Parisian stock market: OPMobility (+16.5%), Valeo (+17.3%) and Forvia, formerly Faurecia (+23.1%), which nevertheless had to face a warning (warning on results).
The appetite for risk has therefore returned to the market in recent days, thanks to China’s desire to strengthen its economic support measures in order to meet its growth objective of 5% in 2024.
“In China, the Politburo held an economic meeting for the first time in September yesterday, reinforcing the impression that the authorities have finally decided to do more to stabilize the economy, which slowed further this summer,” underlines Xavier Chapard, LBPAM strategist.
“After the announcement of historic monetary and regulatory easing measures earlier in the week, the Politburo’s commitment to ‘stop the decline of the real estate market’ and continue rate cuts must be taken seriously, even if the measures necessary fiscal support are not yet specified,” he continues.
Furthermore, the scenario of a soft landing for the American economy gradually took shape throughout the week, with statistics pointing in this direction, on employment, consumption, inflation and growth. Operators took note in particular on Friday, as a statistical highlight, of the PCE (personal consumption expenditures) prices, the Fed’s preferred measure in its assessment of inflation. Prices rose only very modestly, excluding volatile elements, by 0.1%, compared with a target of 0.2%.
The consumer price index in the United States slowed to 2.2% year-on-year in August, compared to 2.3% expected by consensus and 2.5% the previous month. These signs of calm on prices are all the more appreciated as they maintain the hope of further rate cuts in the United States.
Also released on Friday, revised consumer confidence index (U-Mich) data gained momentum, moderately above the target, crossing 70.
On the other side of the Atlantic, the main equity indices ended Friday’s session in disorganized order, with the Dow Jones gaining 0.33% and the Nasdaq Composite symbolically dropping 0.39%. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, ended in balance at 5,738 points.
An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.1160. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.90.
On the agenda this Monday, to follow in priority the Chicago PMI index at 3:00 p.m. and a speech by J Powell, President of the Fed, as part of a forum entitled “Point of view of the Federal Reserve Board” , during the annual meeting of the “National Association for Business Economics”, in Nashville (Tennessee). A question/answer session is expected.
KEY GRAPHIC ELEMENTS
On Thursday, September 26, the CAC index crossed 7,700 points, a major graphic threshold. Not only did he cross it, but he did so in technical conditions providing credit: increasing volumes, gap, closing at session highs, participation of at least 3 sectors, major economic news.
The bullish message was reinforced by the ability to finish on weekly highs thanks to Friday’s session. The participation, measured by volumes, over the whole week, will also have given meaning, as will the participation of several sectors in the increase, not just luxury. In particular, we have seen good recoveries in mining-type cyclicals, or leading players in automotive equipment.
FORECAST
Considering the key graphical factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is above support at 7690.00 points.
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