CAC 40: Wall Street catches its breath, Europe brings its minds together

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Another nervous session on the Paris Stock Exchange on Wednesday, with a significant gap of almost 100 points between the low points and the high points of the day, despite the absence of surprises concerning American inflation. In the end, the flagship index, the CAC 40, fell by 0.14% to 7,216 points, close to the technical threshold of 7,200 points which, in the event of a break, would sound the alarm of additional depreciation in direction of the 7,000 symbolic points, touched on August 5.

The main figure of the day, the CPI (Consumer Price Index) was therefore not a good or bad surprise. On an annual basis, for the broadest basket of products, the price increase reached 2.6%, i.e. inflation in line with expectations, up significantly compared to September (+2.4%). On a monthly basis, excluding food and energy, the increase reached 0.3%.

“We note that the annualized six-month variation in underlying inflation, which Jerome Powell mentioned during the last FOMC (Fed Monetary Policy Committee), is getting a little closer to the 2% target. “This report therefore generally confirms the trend of disinflation in the United States and constitutes an additional element of satisfaction for the Fed”, estimates Bastien Drut, head of strategy and economic studies at CPRAM.

Beyond this factual numerical observation, “inflation is a major concern for American households. The Federal Reserve’s inflation targeting framework is out of step with the feelings of citizens. Donald Trump will seize every opportunity to attack the record of the Federal Reserve in terms of inflation, even if its trade and budgetary policies risk accentuating inflation”, for the strategists at Ostrum AM.

Thomas Giudici, head of bond management at Auris Gestion, taking a step back, ironically comments on the situation: “While the fight against inflation was one of the main drivers of Donald Trump’s victory, this having reached almost 20% since the arrival of Joe Biden, it is quite paradoxical to say that (i) it was Donald Trump himself who initiated the movement with a massive budgetary stimulus at the end of Covid and before the lost elections of 2020 and that (ii) while American inflation is normalizing, its program is considered largely inflationary (increase in customs duties, cessation of immigration, etc.)”

On the stock side, Air Liquide gained 0.9% thanks to Jefferies which switched to buying the stock against “underperformance” previously. The research office believes that the price increases of the industrial gas specialist are sustainable and that its valuation is attractive. Tech, on the other hand, is in a bad direction as a whole: STMicroelectronics lost 4.2%, Capgemini returned 3.9% and Dassault Systèmes 1.8%. Excluding the CAC 40, Nexans gained 4.2% after delivering a convincing roadmap to the market for 2028.

On the other side of the Atlantic, the main equity indices ended Wednesday’s session in mixed order, with the Dow Jones gaining 0.11% and the Nasdaq Composite contracting 0.26%. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, played the averages, in almost perfect balance at 5,985 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 $1.0540. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $67.80.

On the macroeconomic agenda this Thursday, to follow as a priority the producer price indices in the United States at 2:30 p.m.

KEY GRAPHIC ELEMENTS

With a candle with a long red body on Tuesday, November 12, the index defined the amplitude of a new working base, between 7,200 points on the one hand and 7,340 points on the other hand, which we switch to chart resistance zone. The thick volumes of this key session, combined with the opening gap, give meaning to the threshold break.

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 7340.00 points would revive the buying tension. While a break of 7200.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart