CAC 40: Strong decline in oil prices

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In the absence of macroeconomic statistics on either side of the Atlantic, the CAC 40 experienced another volatile session, marked by a significant gap between the low points and the high points of the session, against a backdrop of an avalanche of business results.

One of the most important indicators, monitored on the screens of all the trading rooms, was in sharp decline: this is the barrel of crude, after Israeli strikes in Iran, strikes having preserved oil installations. A barrel of WTI (light Texas crude) was now trading below $68. A bargain for a stock like Air France (+3.81%), which is obviously explained by the structure of its costs, and the mechanical reduction in its fuel bill.

Furthermore, the markets remain focused on the major event which structures political life across the Atlantic: the elections of (or the!) President, in a few days. The latest polls show an extremely close duel between former President Trump and J Biden’s current Vice President, K Harris.

“In this long-awaited presidential election, Donald Trump promises tax cuts for businesses and individuals, but intends to impose customs duties on foreign companies, in addition to carrying out mass deportations of immigrants and an overhaul ministries”, note Robeco strategists.

“Kamala Harris targets the middle class and invests in housing and health care development while increasing taxes on corporations and the very wealthy. Both candidates’ agenda is likely to widen the already growing budget deficit.

That being said, fiscal responsibility is far from the top of the list for voters, as the economy tends to be the dominant issue in the poll, says Mike Mullaney, director of global markets research at Boston Partners, Robeco’s sister entity focused on fundamental value investing.”

On the value side, in addition to Air France, mentioned above, OPMobility stood out, ending the session up 4.78% to 9.42 euros, in the wake of its quarterly publication.

On the other side of the Atlantic, the main equity indices ended the first session of the week in the green, like the Dow Jones (+0.65%) and the Nasdaq Composite (+0.26 %). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.27% to 5,823 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 $1.0810. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $67.90.

On the macroeconomic agenda this Tuesday, to follow as a priority the American consumer confidence index (Conference Board) at 3:00 p.m. To follow at the same time the new job offers (JOLTS). The opportunity to once again measure the resilience of the American economy, in terms of employment and consumption.

Note that the East Coast of the United States has not in turn switched to winter time, the opening of Wall will take place, in the meantime, at 2:30 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 under more pressure last week, a risk for the flagship index, which made a foray below on Wednesday October 16 before recovering significantly during the session. New test on October 22, then on the 23rd and 25th, with low wicks on the corresponding candles.

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