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Legitimately concerned by the rise in geopolitical tensions in the Middle East, operators limited their initiatives on Wednesday, with the CAC stagnating at 7,577 points, significantly below the remarkable graphic threshold of 7,700 points.
Investors therefore remain cautious, on the lookout for the slightest development on tensions between Iran and Israel. The two countries exchanged threats following Tehran’s attack on the Jewish state. This has fueled speculation of a conflagration in the situation in the Middle East, and in turn fears of disruptions to the oil supply.
“Events in the Middle East are very worrying and evolving rapidly. Following Iran’s massive attacks on Israel tonight, the risk of a direct and escalating confrontation between the two countries has sharply increased and could have far-reaching consequences for the region”, alerts Thomas HEMPELL, Macro and Market research manager at GENERALI AM.
“From the perspective of global markets, the most important indicator to watch in the short term is the risk of oil supply disruption. Israeli retaliatory strikes could hit Iranian oil production sites. The pro-Houthis Iranians in Yemen could intensify attacks in the Red Sea, further disrupting global trade and especially oil transportation. And in an extreme scenario (tail risk), Iran could attempt to virtually close the Strait of Hormuz, through. which transits approximately 20 million barrels of oil and petroleum products (~20% of global supply).”
Market operators are also paying attention to the various American employment statistics published this week. They will have to deal in particular with the NFP (Non Farm Payrolls) report, the traditional monthly private employment health bulletin on Friday. This Thursday, new weekly registrations for unemployment benefits will be published. Investors had a prime benchmark yesterday, with the publication of the survey by the private firm ADP, which showed that the American private sector created more jobs than expected last month, at 143,000 creations against 125,000 which were expected by consensus, and after 103,000 in August.
On the value side, outside the oil sector, Air France-KLM continued its decline that began on Tuesday, falling again by 5.5% this Wednesday evening. The company is penalized by the rise in oil prices, the fuel bill constituting one of the main expense items for airlines. Mercialys lost 3.3%, penalized by Jefferies which lowered its advice from “buy” to “hold”. Conversely, Sopra Steria gained 3.1% after announcing a share buyback program of 150 million euros. Maurel and Prom (+4.98%), Vallourec (+2.27%) TotalEnergies (+2.24%), on the other hand, performed well in this context of recovery in crude oil prices.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in almost perfect balance, with operators deliberately lacking initiatives in the run-up to important employment figures, and in the uncertain geopolitical context. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, closed close to 5,700 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 $1.1030. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $71.10.
On the macroeconomic agenda this Thursday, priority should be given to new registrations for unemployment benefits at 2:30 p.m. The final services PMI data in the Euro Zone will be known at 10:00 a.m. and the American services ISM will be revealed at 4:00 p.m.
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.
Monday, September 30, with confirmation the next day, the index fell back below this level, hampering the chances of seeing it fall into lasting support. The next sessions will be decisive. Just like this week’s weekly closing level 40.
FORECAST
Considering the key graphical factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that crossing 7700.00 points would revive the buying tension. While a break of 7465.00 points would restart the selling pressure.
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