CAC 40: A very busy Thursday, on all fronts

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After opening sharply below the graphic threshold of 7,500 points, the CAC managed to limit the damage, closing Wednesday at 7,492 points (-0.40%). It is mainly LVMH (-3.68%) which will have weighed on the trend, after having released a sluggish quarterly copy the previous evening. In the wake of this disappointment, Kering lost 0.82%, Christian Dior 2.97% and Hermes 1.34%.

It is in this nervous context on the business front that the markets will try to gain a little height this Thursday, with the outcome of a Council of Governors of the European Central Bank (ECB).

A reduction of 25 basis points in the main key rate is almost certain. Patrick Barbe, head of investment grade bond investing in Europe at Neuberger Berman, expects “the ECB to maintain its approach dependent on economic data. However, Ms Lagarde is expected to update the Central Bank’s outlook on inflation, given that their last meeting in September had not taken into account the fall in energy prices”

A component which is naturally favorable to a reduction in inflation. “This favorable development, combined with the deterioration of economic conditions, should encourage the ECB to ease its rates at its next two meetings, despite the caution displayed by its president, Christine Lagarde. German government bonds are particularly sought after at “approaching the ECB meeting, leading to an easing of rates”, for Grégoire KOUNOWSKI, Investment Strategy Advisor at Norman K.

Meet at 2:15 p.m. for the actual monetary policy decisions, and at 2:45 p.m. for the traditional press conference.

As for Parisian stocks, excluding the luxury sector already mentioned, Teleperformance jumped 8.7%, supported by Kepler Cheuvreux which switched to buying the stock. Stellantis finished close to breakeven at 12,008 euros after indicating that its deliveries had fallen by 20% in the third quarter. Outside of the CAC 40, it’s a bit of a slaughter. Rexel returned 3.1% and when Ipsos dropped 13.1%, both companies having lowered one or more of their objectives for 2024.

On the other side of the Atlantic, the main equity indices ended Wednesday’s session in the green, like the Dow Jones (+0.79%) and the Nasdaq Composite (+0.28%). . The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.47% to 5,842 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 $1.0850. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $70.00.

On the macroeconomic agenda this Thursday, final consumer price data in the Euro Zone at 11:00 a.m. and for the United States, retail sales, weekly registrations for unemployment benefits and the Philly Fed at 2:30 p.m., the monthly report on industry at 3:15 p.m. and the NAHB residential real estate index at 4:00 p.m.

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, contrary movements, in a clear direction, are still expected. The 7,500 points are under more pressure this week, a risk for the flagship index, which made a foray below on Wednesday October 16 before recovering during the session.

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 7690.00 points.

Hourly graph

Daily Data Chart