CAC 40: A slew of quarterly copies to dissect

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The CAC 40 index experienced another relatively volatile session, while stagnating in closing data (-0.01% to 7,535 points on Tuesday), further weakening the floor of 7,465/7,500 points under which the configuration would become, technically as well as graphically, problematic. The flagship French index will have spent the session on the grill of the quarterly publications of large listed groups.

On the values ​​side, Eurofins Scientific suffered the biggest drop in the Parisian index (-11.5%). The action of the medical and food analysis laboratory clearly disappointed the market after publishing lackluster growth for its third quarter. Note the record for Essilorluxottica (+2%) closing at 221.90 euros, after having recorded an absolute high at 222.60 euros during the session. Capgemini grew by 1.1% in reaction to the excellent publication of SAP which raised several of its objectives, after having seen its revenues increase by 10% excluding currency effects in the third quarter. The German group’s shares gained 2.1% in Frankfurt.

Operators are keeping a close eye on an important dial: that of the temperature of yields on 10-year US Treasury bonds, which are once again significantly above the symbolic threshold of 4%.

And this is due to the very impressive resilience of the American economy, which is clearly widening the gap with Europe. The latest statistics on consumption, notably retail sales, as well as the employment figures, are unequivocal.

Resilience which calls for a flexible rhythm of federal rates. This pressure on 10-year Treasuries can also be explained by the suspense surrounding the outcome, in less than three weeks, of the presidential election. Budgetary questions, in particular proposals to reduce deficits, are not legion in the programs of the two candidates…

“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.

On the other side of the Atlantic, the main equity indices ended Tuesday’s session at levels close to equilibrium, like the Dow Jones (-0.02% to 42,924 points) and the Nasdaq Composite (+0.18% to 18,573 points). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, was balanced at 5,850 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 $1.0800. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $71.50.

On the macroeconomic agenda this Wednesday, to follow as a priority, across the Atlantic, sales of old homes at 4:00 p.m., crude oil stocks at 4:00 p.m. and the Fed’s Beige Book at 8:00 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 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. New test on October 22, with a low wick on the corresponding candle.

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.

Hourly graph

Daily Data Chart