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The CAC 40 index, penalized by cyclical files, finished below 7,500 points on Thursday, down 1.32% to 7,477 points. Risk aversion was still very palpable as investors kept an eye on the Middle East where the situation worsened after the launch of 200 ballistic missiles by Iran against Israel on Tuesday.
Stellantis lost 4.09% and Renault 2.05%. Saint Gobain (-2.29%), Vinci (-2.76%), Orange (-3.86%) were also very poorly oriented. Red lantern of the flagship French index, Bouygues dropped 4.75% after abandoning gross operating profit and turnover growth targets by 2026 for its telecoms subsidiary.
Operators are also showing great caution as they approach, this Friday at 2:30 p.m., the statistical highlight of the week, namely the federal NFP (Non Farm Payrolls) report on the health of American private employment, excluding agriculture. .
Here are the expectations, in the form of three main consensuses. First of all, the unemployment rate is expected to be stable at 4.2% of the active population. Then, job creations in the private sector are expected at 148,000, far from the 190/200,000 that we had for many months, which would support the scenario of a soft landing for the American economy. Finally, the increase in average hourly wages is expected at a moderate level, at +0.2%.
The potential deviation from the target is important because, if necessary, they would lead, in the event of persistent tension, the Fed to exercise restraint in its monetary easing process.
Operators have just become aware of the new weekly registrations for unemployment benefits, without significant deviation from the target, at 225,000 new units.
To be complete on the statistical front, on Thursday, the American ISM services was a good surprise, coming out at 54.9 in September, well above expectations. There was also a good surprise in the final data from the Euro Zone services PMI barometer for the month of September, which ultimately came out at 51.4, compared to 50.5 in initial estimates.
Investors are also keeping a worried eye on public finances, the credibility of which is threatened given the scale of its debt. According to INSEE data adjusted to the end of September, at the end of the second quarter of 2024, public debt stands at 3,228.4 billion euros, an increase of €68.9 billion, after +58. €2 billion in the previous quarter. Expressed as a percentage of gross domestic product (GDP), it stands at 112.0%, after 110.5% in the first quarter of 2024.
“Considering the verdict of the polls on July 7, the center-right executive led by Prime Minister Michel Barnier is a fragile edifice, and a motion of censure cannot be ruled out. In addition, the modalities of implementation implementation of the required budgetary consolidation lacks clarity This results in a further increase in the risk premium on French government bonds compared to German federal bonds,” warn SwissLife AM strategists.
A first measure to increase taxes, on a marginal portion of French households, was proposed this morning. It concerns households without children earning more than €500K/year.
On the other side of the Atlantic, the main equity indices ended in the red, symbolically, a session without relief on the eve of key figures on employment. The Dow Jones lost 0.44% and the Nasdaq Composite, with its strong technological coloring, 0.04%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, dropped 0.17% to 5,699 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 $73.30.
On the macroeconomic agenda this Friday, to follow as a priority the NFP (Non Farm Payrolls) report, a real health report on American private employment for the past month.
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. A drop below 7,465 points this Friday at the close would announce a new wave of clearances.
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 7690.00 points would revive the buying tension. While a break of 7465.00 points would restart the selling pressure.
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