CAC 40: Five consecutive weekly declines

(News Bulletin 247) – The rotten technical floor of 7,200 points will have been undermined throughout the past week, while geopolitical tensions rose a notch with the signing of a Russian presidential decree broadening the conditions of use of nuclear fire. Tensions rose further as Russia struck Ukraine with a hypersonic missile on the city of Dnipro. A missile that did not carry a nuclear warhead. In the end, the threshold of 7,200 points will have held, and the CAC 40 index (0.58% Friday), has re-entered the heart of its working band between 7,200 and 7,340 points.

In terms of statistics, investors have taken note of the very first estimates of the PMI activity barometers in the Euro Zone for November. And it is clear that red dominates, whatever the sector (industry or services) or the country (France, Germany, Euro Zone as a whole). A look at the German component alone for services is telling. The score, expected to be stable at 51.6, finally fell below 50 points (49.4), in the contraction zone. The German industrial component remains deep in red territory, at 43.2, exactly the same score as for France.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, comments on the latest figures from the PMI Flash survey: “The latest survey data highlights stagflation in the euro zone in November: activity has declined throughout the private sector while increases in prices paid and invoiced accelerated, notably under the effect of the increase in costs in the services sector, itself linked to the strong pressures on wages observed in the region throughout the third quarter Price inflation in the services sector is a real headache for the ECB and in such a context, some voices within the institution could argue in favor of maintaining rates at their current level. in December, however, most will probably stick to a 25 basis point reduction.”

But the -50 basis points option is also back on the table. “The weakness of the PMI indices published this morning confirms the current difficulties. While European growth remains weak, the ECB should continue to reduce its rates,” comments Olivier Dubs, manager at JP Morgan Private Bank. “The figures published today give reason to consider a reduction of 50 basis points (0.5 percentage points) in the ECB’s key rates in December,” he adds.

Across the Atlantic, the consumer confidence index (U-Mich) fell slightly (71.8) compared to estimates.

On the values ​​side, Thales lost 2.9%, showing the biggest drop in the CAC 40 while the group is the subject of an investigation for corruption in France and the United Kingdom. The company responded by saying it disputed the “allegations brought to its attention.” Banks and cyclical stocks looked gloomy, potentially penalized by poor economic indicators in the euro zone. BNP Paribas lost 2.2%, Société Générale 2.6% and Crédit Agricole SA 1.7%.

On the other side of the Atlantic, the main equity indices ended Friday’s session in the green, although within narrow margins, like the Dow Jones (+0.97%) and the Nasdaq Composite ( +0.16%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, nibbled 0.35% to around thirty points from the symbolic threshold of 6,000 points. Note that the appointment of S Bessent as head of the Treasury is likely to please Wall Street.

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 $1.0470. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $70.10.

On the macroeconomic agenda this Monday, priority should be given to a speech by the President of the Bank of Germany at 6:30 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.

The 7,200 points constitute an increasingly fragile harassed floor. It was preserved last week, allowing the index to begin this week at the heart of the working band mentioned above.

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