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Already considered the new bad student of the European Union in terms of budget, France is viewed with greater suspicion by the financial markets, while the Prime Minister, M Barnier, has taken down the constitutional card of article 49.3, engaging the responsibility of its government. This procedure, provided for by the Constitution, makes it possible to adopt the social security finance law without a vote from the National Representation. The other side of the coin being that if a majority of MPs vote for one of the motions of censure that will be tabled, the government falls, and the President is tasked with appointing a new Prime Minister, with a view to constituting a new government, with balances different policies… In short, it is the specter of chronic political instability that worries market operators.
This Monday, the CAC 40, very nervous, will have experienced a volatile, eventful session, depending on the declarations of members of the opposition, the last minute concessions from the government, and the use of this “49.3”. In the end, the index finished in balance, slightly above 7,200 points.
“After the hope aroused by concessions from the Prime Minister on certain measures carried out by the National Rally, it appears that these efforts are not enough. The RN confirmed its intention to vote on the motion of censure tabled in reaction to the use of 49.3 by “If investors had initially welcomed the government’s concessions, they are now worried about the political strategy of the RN, which is fueling an escalation in political instability in France”, note the strategists at Sax Bank.
Two motions of censure were filed immediately. The vote takes place, as specified in the Constitution, after a period of 48 hours. The stress is therefore palpable, but no feeling of fear to report, let alone panic at this stage. An eye on the spreadthis gap between the German rate and the French 10-year rate is essential.
“The panic was in November 2011, during the debt crisis in the euro zone, that this spread rose to 190 basis points, that is to say 1.9% difference between the two rates” , puts Alexandre Baradez (IG France) into perspective. “And for the most fragile countries in the euro zone at the time, like Italy for example, this spread had even risen to almost 550 basis points. Worse still, Portugal whose 10-year rate increased was spread by…1550 basis points with the German 10-year, that is to say more than 15% difference! Without forgetting, finally, the ultimate risk with the spread of…3800 basis points (! ) between the 10-year rates of Greece and Germany in March 2012. This is what a panic situation, a systemic risk, is on the financial markets.”
This spread The 10-year OAT Bund was certainly heating up, remaining contained below 90 basis points on Monday.
In terms of statistics, operators took note of the industrial PMI activity barometer in the Euro Zone at 45.2 points, with no deviation from the first estimates. Remember that a score below 50 points means a contraction in activity. the American manufacturing ISM, expected at 47.7, beat expectations, at 48.4.
On the value side, Stellantis fell by 6.37%, after the surprise resignation of its boss Carlos Tavares. The reasons for Carlos Tavares’ sudden departure have not been frankly explained by the company. “The success of Stellantis since its creation has been based on perfect alignment between the key shareholders, the board of directors and the CEO (general manager, editor’s note). However, in recent weeks, different points of view have emerged, which brought the board of directors and the CEO to today’s decision,” explained Henri de Castries, a director of Stellantis.
Wordline finished sharply up 14%, driven by a return of speculation after Reuters reported that private equity funds had begun examining potential buyout offers. Ipsos returned 4.4%, the survey research group fell on the Paris Stock Exchange after indicating on Monday that it was in discussions with Kantar Media with a view to a potential merger, thus confirming information from the Reuters agency.
On the other side of the Atlantic, the main equity indices ended the first session of the week in disorganized order, with the Dow Jones contracting 0.29% and the Nasdaq Composite jumping 0.97% on records historical. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.24% to 6,047 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 $1.0490. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.20.
On the macroeconomic agenda this Tuesday, priority should be given to new job offers (JOLTS) in the United States 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.
The CAC managed to save 7,200 points on Monday, after opening well below/
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 7000.00 points would restart the selling pressure.
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