CAC 40: White smoke at the White House?

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Weighed down by the technology sector, the CAC 40 (-0.50%) reversed course compared to Friday, coming up against a new weakened technical floor, around 7,340 points. Low volumes are to be noted, however, as investors remain wait-and-see as the outcome of the American presidential election approaches, the diplomatic, geopolitical and commercial impacts of which are major on a global scale. The trading volumes recorded on Monday November 4 were even lower than those observed on Friday November 1, a public holiday and therefore marked by the absence of a large group of operators.

On the final sprint for accession to the White House, Alexandre Baradez (IG France) notes a small “deflation of Trump Trade”, polls to support this.

“The publication of polls more favorable to Kamala Harris has […] played in the change in sentiment in financial markets. There was notably this unexpected poll in Iowa: while Donald Trump easily won the vote in this state in 2016 and 2020, a poll now gives Harris in the lead, notably due to women’s voting intentions. Whereas this was not the case during this same survey in September.”

Be careful, however, warns Christopher Dembik, investment strategy advisor at Pictet AM, we will not necessarily have, on the night of 05 to 06, certainty about the identity of the chosen one.

“On November 5, the first polls coming out of the polls will be published at 11 p.m. Paris time. They are usually unreliable. It is only from 1 a.m. on November 6 that the first partial results in Florida will fall In Georgia, which is a key state, it is expected to be much slower than usual Ballot counting took 16 days in 2020. Due to a change in election rules, it is expected to take even longer! time this time…”

“Around 2 a.m., we should have data on mail-in votes in Pennsylvania. This will be important, because Trump needs Pennsylvania, Michigan or Wisconsin to win. At this point, his chances are highest in Pennsylvania At 5 a.m., if the gap is significant enough, the name of the next occupant of the White House could be known.

In the statistical chapter, RAS on the side of the final data from the PMI barometers in the Euro Zone, very close to the first estimates for the month of October. No significant deviation from the consensus also for the Sentix index of investor confidence in the monetary union. The index came out at -12.8, still stuck in negative territory. The only German component, under the magnifying glass of currency traders obviously, improves a little, by almost two points.

On the values ​​side, STMicro (-2.98%) suffered the effect of a lowering of recommendation from Morgan Stanley. The American bank thus lowered its advice on the action to “underweighting” (equivalent to “sell” in its nomenclature) against “online weighting” previously, while cutting its price target to 20 euros, against 35 euros previously. This new target assumes a potential decline for the stock of nearly 20%, at Friday’s closing price.

Mechanically, it is the entire technological sector of the Parisian coast which suffered, like Thalès (-1.97%), Alten (-2.45%), OVH (-2.63%) , Lectra (-3.76%), Soitec (-3.96%), WFab (-4.42%), and Ubisoft.

Note that Schneider Electric (-2.33%) will have declined only moderately following the (surprise) departure of its CEO Peter Herweck.

On the other side of the Atlantic, the main equity indices ended Monday’s session in the red, like the Dow Jones (-0.61%) or the Nasdaq Composite (-0.33%). . The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.28%.

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 $1.0880. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $71.20.

On the macroeconomic agenda this Tuesday, to follow as a priority the ISM activity barometer in services in the United States.

Finally, note that the East Coast of the United States having in turn entered winter time, the opening of Wall will be again, and as usual, at 3:30 p.m.

KEY GRAPHIC ELEMENTS

The 7,465/7500 points gave way on Wednesday 30/10, on gap, in thick volumes, and in conditions of notable volatility. The short-term bearish message is thus mechanically validated. The next identifiable level is 7,340 points.

Note that Friday’s session will have “saved” the appearance of the weekly candle, but that the new floor of 7,340 points is weakened. Caution, therefore, in a market environment dominated by nervousness.

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 7465.00 points would revive the buying tension. While a break of 7340.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart