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The CAC 40 (+0.52% to 7,560 points) regained some momentum on Wednesday, rebounding weakly, and in random volumes, on the fragile floor of 7,500 points. Markets continued to digest their disappointment from the day before, as Chinese authorities did not announce any large-scale additional stimulus measures to support growth, thus disappointing investors.
In the geopolitical chapter, “the gears in the Middle East are accelerating”, notes Geoffroy Landoeuer, Director of Financial Management at Turgot AM. “In Lebanon, Israel managed in just a few days to injure thousands of Hezbollah soldiers and decapitate its staff. While the Iranian response was feared – it finally materialized on October 1 – oil prices , which fell sharply over the period (-8%) due to the deteriorating international situation, will be worth watching…”
On the value side, while the German automotive supplier Continental raised its margin forecasts, Valeo (+2.99%) and Forvia (+4.28%) were sucked upwards. Renault gained a welcome 3.31%. According to Bernstein, the diamond brand company held a telephone briefing ahead of the publication of its third quarter earnings, sending a reassuring message. The manufacturer’s shares, which had been penalized by the profit warnings of its rivals, are gaining ground again.
Overall, investors opted for caution before the publication of the minutes, the minutes of the last meeting of the American Federal Reserve. They will try to detect valuable clues about the extent of future rate cuts while the job market in the United States remains solid. See you at 8:00 p.m. for these Minutes. In the immediate term, and according to data from the CME Group’s FedWatch tool, the probability of a 25 basis point decline in Fed Funds is 86.7%.
As a reminder, the unemployment rate first published, expected stable at 4.2% of the active population, fell 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. The market preferred to see the glass half full, reassuring itself about the capacity of the American economy to land softly, or even… not to land at all (no landing). A scenario that is starting to worry the stock market.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in green territory, like the Dow Jones (+1.03%), more inspired this time than the Nasdaq Composite (+0.60%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, once again played the averages, gaining 0.71% to 5,792 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 $1.0930. 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 Thursday, to follow as a priority the publication of key figures on inflation: consumer prices (CPI). In the broadest price basket, prices are expected to rise by 2.3%, compared to 2.5% in the previous month. Any higher result would tense up the trading rooms.
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 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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