CAC 40: The 7,500 points, a worm-eaten technical floor

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The CAC 40 index ultimately failed to preserve its meager, hard-won gains during the session on Thursday, closing in balance, drawing a very ugly candle eyeing the very weakened graphic threshold of 7,500 points.

In terms of statistics, the German industrial PMI, rightly under the microscope of investors, came out in preliminary data for the current month at 51.4, against a target of 50.6. It is therefore leaving its contraction zone, to a slightly greater extent than anticipated, without however brushing aside the recurring concerns about the German industrial model, which has shown its limits in inflationary periods.

This allows the synthetic industrial index for the entire Euro Zone to significantly beat the target, coming out at 45.9 points. However, “for the European Central Bank, these latest PMI data are hardly reassuring”, comments Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

“The rise in prices is expected to maintain a sustained pace in the services sector, as suggested by the acceleration in inflation of prices paid and prices invoiced in October, most probably linked to the persistence of strong pressures on wages, particularly prevalent in the services sector, in view of this situation, the ECB is expected to reduce its key rates by only 25 basis points in December, instead of the 50 basis points previously anticipated.”

Note that the American PMIs came out slightly below expectations, only this evening for industry (47.8) and services (55.3).

On the values ​​side, investors had to dissect a torrent of results. At the top of the CAC 40, Renault finished up 4.7% after delivering reassuring activity in the third quarter during which both its overall turnover and that of the automobile sector increased, excluding currency effects. Stellantis, which will announce its turnover next week, gained 1.7%.

Hermès limits its gains to 1.1% after once again delivering double-digit growth in the third quarter, almost ignoring the general slowdown in luxury.

Danone also reported robust third-quarter revenue, closing up 2.8%.

Conversely, Edenred lost 14.7%. Growth was disappointing and the group announced a regulatory risk, namely a capping of its commissions in Italy.

Michelin slipped 8.2% after lowering its sector operating profit forecast for 2024 following a deterioration in volumes in the third quarter.

On the other side of the Atlantic, the main equity indices ended Thursday’s session in mixed order, with the Dow Jones contracting 0.33% to 42,374 points and the Nasdaq Composite gaining 0.76% to 18 415 points, helped by Tesla, which soared by 21.92% in the wake of an exciting quarterly publication.

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 $70.30.

On the macroeconomic agenda this Friday, to follow in priority the IFO business climate index in Germany at 10:00 a.m. and orders for durable goods in the United States at 2:30 p.m. At 4:00 p.m. the revised data from the consumer confidence index (U-Mich) will be revealed.

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 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