CAC 40: The specter of political instability weighs

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In the absence of a benchmark from Wall Street, closed for the Thanksgiving holiday, the Parisian market managed, in very sparse volumes, to recover 0.51% to 7,179 points. Without hanging up, therefore the technical threshold of 7,200 points, which constitute the technical challenge of the week. In this sense the closing this evening is important. Remember that Wall Street will reopen, for a shortened session only, with debates closing at 7:00 p.m., and in the absence of many operators, busy… digesting the turkey and starting their end-of-year purchases, Black Friday obliges.

The Parisian market remains focused on the impact that censorship of the Barnier government could have, as the seemingly inevitable use of article 49.3 approaches to pass the budget. Thursday, the Minister of Economy and Finance Antoine Armand said he was ready to make “concessions”, explaining that he wanted to avoid a “storm” in France, on the air of BFMTV-RMC. Threatened by a motion of censure, Michel Barnier therefore begins to let go. The Prime Minister announced in an interview with Le Figaro that he would renounce the increase in taxes on electricity, one of Marine Le Pen’s main demands. A gesture on illegal immigration is also on the table, while Marine Le Pen, leader of RN deputies,

In the event of a motion of censure which would bring down Michel Barnier and his government in the coming weeks, France would find itself without a budget. Several options are on the table to still manage to complete the finance bill.

“There are still difficulties. It is Thursday. He has until Monday” [2 décembre]warned the leader of the far right to Le Monde.

In terms of statistics, operators took note of the inflation figures in Germany, calculated according to European standards for the month of November. The increase in consumer prices remained stable at 2.4% over one year, whereas economists surveyed by Reuters were counting on an increase of 2.6% on an annual basis. The governor of the Bank of France, François Villeroy de Galhau, declared this Thursday that “all the reasons are there” for a “reduction in interest rates” on December 12. “Optionality should remain open regarding the extent of the reduction, based on available data, economic projections and our assessment of risk,” he continued.

On the value side, Airbus, the biggest riser in the CAC 40, ended up 4.1%. Rémy Cointreau gained almost 3% after indicating that it was preparing for “recovery” on the sidelines of half-year results marked by difficult activity in its two key markets, namely China and the United States. LDC appreciated by 1.3% after confirming its 2024-2025 annual objectives.

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 Friday, priority will be given to consumer prices in the Euro Zone at 11:00 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.

A weekly candle with a close below 7,200 points would weaken the configuration.

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