CAC 40: Weakening of a floor at 7,500 points

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At the dawn of a week full of quarterly publications from listed companies, and in the absence of statistical benchmarks, the Parisian market went into reverse on Monday, dropping 1.01% to 7,536 points, close to the intermediate floor of 7,500 points which, if it were to be broken, would further weaken the graphic configuration.

The market continues to monitor China’s gradual announcements to boost its economy and meet its 2024 growth target of around 5%. With this in mind, the People’s Bank of China, the Chinese central bank, announced on Monday the reduction of two key rates to support the economy.

Another subject of uncertainty is the very close outcome of the American presidential elections in a few days.

“The US elections are a significant event likely to increase market volatility: political uncertainty, and market reactions can create both risks and opportunities for investors. For example, policies favoring certain sectors – green energy under the Democrats or deregulation under the Republicans – can lead to significant fluctuations in these areas”, analyzes Andrea Tueni, Head of Sales Trading Saxo Bank.

And this even as the Fed begins a monetary shift, which it hopes to be in full control, even as the American economy demonstrates impressive resilience after long months of high rates.

On the values ​​side, the star of the day is called Faurecia (+5.25%). The automotive supplier presented a reassuring quarterly report, in a complicated environment, even though warnings have multiplied in recent weeks on manufacturers. In its wake, the former Faurecia brought along Valeo (+0.79%) and OPMobility (+3.14%).

After a profitable Friday, against a backdrop of encouraging Chinese statistics, luxury goods were already declining again in Paris, like Kering (-2.35%) and LVMH (-1.96%).

On the other side of the Atlantic, the main equity indices ended the first session of the week in scattered order, like the Dow Jones (-0.80% to 42,931 points) and the Nasdaq Composite ( +0.27% to 18,540 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.18% to 5,853 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 $1.0820. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $69.75.

On the macroeconomic agenda this Tuesday, to follow in priority the manufacturing index of the Richmond Fed at 4:00 p.m. and a speech by Ms. Lagarde, President of the ECB, as part of the Annual Meeting of the IMF and the World Bank .

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.

Hourly graph

Daily Data Chart