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It is China, once again, that investors have been eyeing. But with a strong dose of concern this time, due to the absence of new consumer recovery measures, and due to the introduction of security deposits on imports of European spirits , like cognac. Which constitutes an important prelude before the implementation of customs surcharges on these products.
Results on the Paris Stock Exchange, significant declines, unsurprisingly, for luxury and spirits groups, such as LVMH (-3.57%), Pernod-Ricard (-4.18%), Kering (-4.18%), -4.45%) and Remy Cointreau (-6.37%).
The market also continues to monitor the situation in the Middle East, while tensions in the region propelled the price of Brent above $80 per barrel on Monday. This Tuesday, prices started to fall again, undermined by renewed concerns about Chinese demand. The MSCI China also lost more than 6% on Monday, after a public holiday week.
The market also continues to digest the content of the latest NFP report on American employment, published Friday. As a reminder, the unemployment rate first of all, expected to be stable at 4.2% of the active population, is down to 4.1%. Job creation in the private sector (excluding agriculture) exploded to 254,000, against a consensus of 147,000 (!). Finally, average hourly wages increased by 0.4%, extending the trend from August (+0.5%). Figures which show great resilience in private employment, and which could theoretically push back expectations of a rate cut.
“Has the market, once again, been a little too excited about forecasts of key rate cuts? The publication of the September employment report in the United States has in any case reminded investors that the American economy was still far from the expected landing, leading to a fairly significant repricing of interest rates (respectively +36 bps and +22 bps for the 2-year and 10-year American bonds)”, notes Thomas Giudici, responsible for of the bond management of Auris Gestion.
Another element of uncertainty for the CAC40: “the evolution of the political situation and budgetary issues in France”, for Alexandre Baradez (IG France). “The negotiations which continue with the different political sensitivities and the urgency of the timetable, that of submitting a convincing copy to Brussels, do not allow the markets to be fully reassured for the moment. The spread with Germany does not reflect not a situation of panic but a situation of strong vigilance on the part of the markets.”
In terms of statistics, there is little to get your teeth into on Monday. Let us nevertheless note the NFIB index of American small businesses, very close to the consensus at 91.5 points. And the deficit (structural let us remember) of the American monthly trade balance, at -$70.4 billion.
On the other side of the Atlantic, the main equity indices ended Tuesday’s session in the green, especially on the technological side of the stock. If the Dow Jones, rich in banks, nibbled 0.30%, the Nasdaq Composite gained 1.45%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, rose almost 1%, to 5,751 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 $1.0970. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $74.00.
On the macroeconomic agenda this Wednesday, to follow as a priority across the Atlantic, wholesaler stocks at 4:00 p.m. as well as crude oil stocks at 4:30 p.m.
10-year Treasuries, the yield on 10-year US Treasury bonds, remained above the symbolic threshold of 4%.
KEY GRAPHIC ELEMENTS
The nervous oscillations will continue to be concentrated between two major levels, the 7,465 / 7,500 points on the one hand, and the 7,690 / 7,700 points on the other. A quotation band from which an exit would release additional energy. But in the immediate future, contrarian movements, in a clear direction, are expected.
FORECAST
Considering the key graphical 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 below resistance at 7810.00 points.
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