CAC 40: Wall Street remains closed, French politics at the heart of attention

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The CAC 40 index (-0.72% to 7,143 points) fell below the technical threshold, already heavily weakened, of 7,200 points on Wednesday, after Trump’s customs announcements at the start of the week, and against a backdrop of political uncertainty In France. And this while a joint committee, composed by definition of the same number of senators and deputies, meets to try to find an agreement on the budget, before the use, if necessary, by Michel Barnier, of “49.3 “. A solution deemed “probable, certainly” by the person concerned, interviewed last night on TF1. The Prime Minister insisted on the consequences on the financial markets in the event of censorship of his government.

While it is clear that the Prime Minister, with this rhetoric, is playing the card of defending his young government, the consequences of a new period of political instability could weigh on rates. And this while S&P is preparing to publish its note on France at the end of the week.

The day after Michel Barnier spoke on TF1, France’s 10-year borrowing rates temporarily exceeded those of Greece, the most indebted country in the European Union. Worse, the “French 10 year” is now higher than the rate of almost all the countries that the Anglo-Saxons pejoratively nicknamed PIIGS at the beginning of the 2010s, namely Portugal, Ireland, Italy, Greece and ‘Spain.

As a reminder, regarding the issue of American protectionism, the next tenant of the White House wishes to impose customs duties of 25% on all products from Mexico and Canada and increase those for products imported from China by 10%. Donald Trump justifies these trade retaliatory measures in retaliation for illegal immigration, and drug trafficking and in particular Fentayl, a powerful opioid which is wreaking havoc in the United States.

On the statistical side, the preferred inflation gauge of the American Federal Reserve, namely PCE prices, accelerated slightly to 2.3% year-on-year in October, and by 2.8% for its component excluding food and energy, this which is in line with market expectations.

Shortly before the opening of Wall Street, a battery of American statistics, concentrated before Thankgiving, came to liven up the debates. Let’s start with the traditional new weekly registrations for unemployment benefits, which give an idea of ​​the state of tension in the job market. They come out at 213,000, very close to expectations. No deviation from the consensus regarding Q3 GDP, at +2.8% on an annual basis in preliminary data. Orders for durable goods do not send a particularly readable message either, due to a small deviation from the consensus, on the other hand, the monthly trade balance for goods, structurally in deficit, pleasantly surprises by coming out below the symbolic threshold of 100 billion deficit.

Data which confirms the excellent health of the world’s largest economy. The day before, the always closely followed consumer confidence index (Conference Board) came out at 111.7, very firm and in line with expectations. As a reminder, consumption is the primary structural engine of wealth creation across the Atlantic.

On the value side, Teleperformance contained its decline to 2.1%, with the market having difficulty welcoming the acquisition of the American company ZP Better Together, a specialist in linguistic solutions and technological platforms intended for deaf and hard of hearing people. Aramis grew by 3.9%, the specialist in the sale of used and reconditioned vehicles announced that it had returned to profit in 2023-2024 and presented a strategic plan for 2027.

On the other side of the Atlantic, the main equity indices have begun a breathing phase before the long Thanksgiving holiday break. The Dow Jones lost 0.31% and the Nasdaq Composite 0.59%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.38% to 5,998 points. Remember that Wall Street is closed this Thursday for the traditional Thanksgiving holidays. The stock markets will reopen on Friday for a shortened session, so we should expect starving volumes.

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 $1.0550. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.50.

On the macroeconomic agenda this Thursday, to follow as a priority German inflation in the sense of consumer prices (timetable not communicated) and the M3 money supply in the Euro Zone at 10:00 a.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. But on Tuesday, it was undermined once again, before breaking on gap on Wednesday. Weekly confirmation would have unfortunate consequences, since below, there is no branch to catch up on before the psychological threshold of 7,000 points, which has not been visited for a year.

FORECAST

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

This bearish scenario is valid as long as the CAC 40 index is below resistance at 7200.00 points.

Hourly graph

Daily Data Chart