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Another very volatile week for the CAC, which for a neutral weekly balance sheet, will once again have experienced erratic movements between 7,500 and 7,600 points. The conclusion of the Board of Governors of the Fed on Thursday will have brought its share of relief, in a market which is approaching a wave of quarterly results from the major groups of the stock market.
On Thursday, operators appeared relieved, anticipating an acceleration in the rate of reduction in key rates, in a Europe relieved by the “control of inflation”, but worried about the health of German industry, the situation French public finances and in general, the state of the economy of the monetary union.
Unanimously by Governors, the European Central Bank decided to lower its main key rate by 25 basis points. This is the third reduction in its key rates this year, after the one decided in June, followed by another in September. It is justified by the slowdown in inflation in the euro zone.
“Above all, even if she did not commit to anything, Lagarde did not close the door to faster rate cuts and stressed the importance of the projections of the Treasury services and the next data publications in the weeks to come”, commented Nadia Gharbi, Senior Economist, at Pictet Wealth Management following the press conference yesterday. Ms Garbi maintains her “vision that the ECB would cut by 25 basis points at each General Council meeting until June 2025, bringing the deposit rate down to 2.0%.”
“Ms. Lagarde acknowledged that the outlook for economic growth was weaker than expected, while risks to the ECB’s inflation forecasts are tilted to the downside,” Nomura economists added.
As for Friday’s session, it will have benefited from a battery of good Chinese statistics. China’s gross domestic product (GDP) growth fell to 4.6% in the third quarter, a one-year low. But this figure turns out to be higher than expectations, placed at 4.5%, according to Deutsche Bank. The German bank notes that activity improved in September, estimating that GDP should have reached 5% in the ninth month of the year, compared to 3.7% in August. Furthermore, retail sales in China, a measure of household consumption, were up 3.2% year-on-year, compared to 2.3% expected by the LSEG consensus cited by Reuters. Industrial production for the same month also exceeded expectations.
It is naturally first and foremost the very strategic luxury sector which will have benefited the most in Paris, like its emblematic representatives: LVMH (+2.26%); Kering (+3.50%), L’Oreal (+0.15%) or Hermes (+0.06%).
On the other side of the Atlantic, the main equity indices ended the last session of the week in green territory, close to the zeniths, like the Dow Jones (+0.09% to 43,275 points) or of the Nasdaq Composite (+0.63% to 18,489 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.40% to 5,864 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 $69.05.
On the macroeconomic agenda this Monday, the American leading indicators index at 4:00 p.m. Note that the annual meeting of the International Monetary Fund (IMF) is opening.
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 were more under pressure last week, a risk for the flagship index, which made a foray below Wednesday October 16 before recovering significantly 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.
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