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The planned end of the Barnier government will not have caused the CAC 40 to falter, quite the contrary. On Wednesday, the flagship tricolor equity index gained 0.66%, returning above 7,300 points, in discreet volumes, however, proof of the great restraint of operators.
The government of Prime Minister Michel Barnier was facing a vote in the National Assembly on two motions of censure, one tabled by the New Popular Front (NFP) and the other by the National Rally. Unsurprising results: 331 deputies from the left and the National Rally censored the government, by voting on the first of the motions.
If the famous 10-year OAT Bund spread remained firm on Wednesday near 84 basis points, it was well below the “barometer” recorded on Monday (88).
“The tensions on the French bond market are, obviously, still present. Portugal now borrows at 40 basis points less at 10 years than France. But for the moment, there is no panic”, puts Christopher into perspective Dembik, investment strategy advisor at Pictet AM. “Unless there are any last-minute surprises, the motion of censure should be voted on. It is already integrated into the prices of financial assets.”
“The new Prime Minister, who could possibly be the outgoing one, will have the heavy task of presenting a special law in the coming days in order to allow the renewal of the 2024 budget and which must, in particular, include the possibility offered to Social Security of get into debt.”
The President of the Republic, E Macron, who is responsible for appointing a new Prime Minister, will speak this evening, at 8:00 p.m., during a radio and television address.
In terms of statistics, on the American employment file, operators took note of the results of the survey by the private firm ADP at 2:15 p.m., a prelude to the publication at the end of the week of the monthly NFP report. According to Automatic Data Processing, the American economy has created 146,000 jobs in the private sector, a figure without much difference from the consensus target.
Also to be followed tomorrow are the traditional weekly registrations for unemployment benefits, expected at a level still close to 200,000. Currency traders took note yesterday of data relating to the job market for the month of October which highlighted light an increase in job offers. According to the JOLTS* report from the US Department of Labor, the number of job openings reached 7.74 million in October, compared to 7.37 million in September.
This strength in American employment, combined with the inflationary and expansionary impulses of D Trump’s program, complicates the Fed’s task. According to the CME Group’s FedWatch tool, the probability of a 25 basis point drop in Fed Funds remuneration is 74% at the end of the next FOMC on December 18.
Red lantern of the flagship Parisian index, Orange lost 3% after Morgan Stanley downgraded the value to “online weighting” from “overweight”. The establishment believes that the intensification of competition in France does not bode well for its main profitability indicator, which could decline next year in France.
Excluding the CAC 40, equipment manufacturers Forvia (+5.54%), Valeo (+4.03%) and OPMobility (+4.48%) rebounded strongly on technical bases, despite a pessimistic note from UBS on the sector.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in the green, like the Dow Jones (+0.69%) and the Nasdaq Composite (+1.30%). , setting new zeniths. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.61% to 6,086 points.
An update on other risky asset classes: around 8:00 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0530. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.40.
On the macroeconomic agenda this Thursday, to follow in priority French industrial production at 8:45 a.m. and weekly registrations for unemployment benefits in the United States at 2:30 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. 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 like Friday 29/11. At the heart of the week, it even managed to close above 7,300 points, giving credence to the graphic scenario of volatile navigation in a range, or even a diamond, between 7,090 and 7,340 points.
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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