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The maintenance of the AA- sovereign rating, with a stable outlook, for France from the S&P agency, will not weigh heavily in the face of the specter of entering a phase of major political instability. The CAC40, which is expected to fall sharply this Monday, should break 7,200 points again, after reintegration on Friday.
The “concessions” made on the budget by Prime Minister M Barnier are not considered sufficient by the leader of the RN in the Assembly, who therefore leaves doubt of a vote on a motion of censure against the government , following the “forceful passage” of the vote, thanks to article 49.3, which could be used this afternoon.
If the Prime Minister takes the podium and activates this constitutional mechanism, the National Rally (RN) will vote to censure his government, “barring a last minute miracle”, in the words of Jordan Bardella, President of the nationalist party this morning on RTL airwaves. In the event of a vote on a motion of censure filed by one of the minority or opposition groups, several scenarios would be considered, both for the executive and for the budget itself./
Risk appetite also remained upset by Trump’s very recent comments on foreign trade. If we knew the 45th, and soon 47th President of the United States, was offensive on customs tariffs, very concrete declarations of intent shook the Asian and European stock markets.
He wants 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 commercial 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.
“As everyone knows, thousands of people are streaming through Mexico and Canada, bringing with them crime and drugs at levels never seen before,” he said. “This tariff will remain in effect until drugs, particularly Fentanyl, and all illegal aliens stop invading our country!”, continued the president-elect.
Enough to weigh on the prices of Stellantis, which has numerous factories in Mexico. Note the announcement of the departure, with immediate effect, of Franco-Portuguese Carlos Tavares from the head of the automobile group.
In terms of statistics on Friday, operators took note of consumer prices in the Euro Zone, as a first estimate for the month of November. Excluding food, energy, alcohol and tobacco, prices are up 2.7% year-on-year, stable compared to October, where the consensus was forecasting 2.8%.
“Headline inflation is up in November as expected, but the stability of core inflation is the positive surprise from this preliminary inflation report. Above all, disinflation in services is resuming and this movement will have to intensify in the coming months so that inflation can reach its target in a sustainable manner,” notes Juliette Cohen, strategist at CPRAM.
“The ECB is expected to carry out a further rate cut of 25 basis points at its meeting on December 12. The increased confidence in the disinflation process as well as the weak growth dynamic of the euro zone justify the continued withdrawal of the character restrictive monetary policy,” she continues.
To be complete on the values side, Elior gained 5.9% benefiting from a boost from JP Morgan which raised its opinion to overweight and its price target from 3.50 euros to 4.50 euros. Elis ended slightly down 0.5%, the industrial laundry specialist announced the acquisition of the Spanish group Carsan.
On the other side of the Atlantic, trading resumed on Friday, for a shortened session the day after Thanksgiving Thursday. The Dow Jones gained 0.42% and the Nasdaq Composite 0.83%. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, appreciated by 0.56%, returning above the symbolic threshold of 6,000 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 $1.0550. 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 Monday, to follow as a priority the manufacturing PMI in the Euro Zone (final data for November) at 10:00 a.m. as well as the American manufacturing ISM 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 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.
This Monday, the opening should be significantly below 7,200 points, destroying hopes of rapid reintegration.
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.
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