CAC 40: The floor of 7,200 points suffered but held

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The geopolitical “price” issue forms the backdrop to the market, but it came, due to hot news, to further revive the nervousness on Tuesday. Russian President Vladimir Putin signed a decree on Tuesday expanding the possibilities of using nuclear weapons. Quoted by AFP, Dmitri Peskov, Kremlin spokesperson, considered that this decision was “necessary” in the face of “threats” from the West.

Russia’s move comes two days after the Biden administration gave Ukraine a boost, allowing it to strike Russian soil with US long-range missiles. And after, according to the Russian military, Ukraine launched six tactical missiles into Russian territory. Five were destroyed and the last was damaged by Russian anti-aircraft defense. AFP confirmed the strike with a Ukrainian official on condition of anonymity.

The CAC 40, after making inroads below the fragile technical floor of 7,200 points, managed to limit the damage at the end of the session, with the support of Wall Street, by closing down 0.67% at 7 229 points. Luxury will have weighed, like LVMH (-1.92%) or Kering (-2.23%). With a strong “Beta” effect, the shares of automotive equipment manufacturers were heavily penalized: Forvia lost 3.57%, Valeo 4.20% and OP Mobility 6.86%, in the bottom of compartment A of the rating. The former Plastic Omnium was, in addition, weighed down by Bernstein who initiated his advice on value at “underperformance”, equivalent to “sell” in his terminology.

Among the few significant increases of the day, ADP was helped by Stifel which went from “hold” to “buy” on the stock this Tuesday. As well as Thalès (+1.68%) and Dassault Aviation (+1.88%), as defense stocks.

In the macroeconomic chapter, relegated to the background on Tuesday, for the Euro Zone, the final consumer price data, in final data for the month of October, excluding food, energy, alcohol and tobacco, came out at +2.7 % on an annual basis, consistent with initial estimates. RAS on housing starts and housing building permits in October in the United States, very close to expectations.

On the other side of the Atlantic, the main equity indices ended Tuesday’s session in mixed order, with the Dow Jones contracting 0.28% and the Nasdaq Composite gaining 1.04%, on the eve of the quarterly publication of NVidia. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.40% to 5,916 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 $1.0590. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $69.20.

On the macroeconomic agenda this Wednesday, to follow in priority a speech by C Lagarde at 2:00 p.m. and crude oil stocks across the Atlantic at 4:00 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.

The 7,200 points constitute an increasingly fragile floor.

FORECAST

Considering the key graphical factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.

This bullish scenario is valid as long as the CAC 40 index is above support at 7200.00 points.

Hourly graph

Daily Data Chart