CAC 40: American inflation on the menu this Wednesday, before the ECB tomorrow

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Classically, in the form of a consolidation, the CAC 40 index digested the progress of the previous six sessions on Tuesday. The flagship index will have been weighted in particular by luxury, like the star of the LVMH rating (-2.54%). The action of the group founded by Alain Chevalier and Henry Racamier in 1987 amplified its increase the day before, by 3.52%, in the wake of rather accommodating declarations from the Chinese Politburo on monetary policy. Kering lost 2.21% on Tuesday.

Investors continue to monitor China where markets are hoping for further announcements of stimulus measures this week. On Monday, China’s politburo said a “moderately accommodative” monetary policy should be conducted in 2025, as well as a “more proactive” fiscal policy. These statements propelled Chinese markets and the luxury sector.

While the agenda is rather sparse for this first part of the week, major meetings are looming, with this Wednesday, the consumer price indices in the United States and Thursday, the outcome of a new Council of Governors of the European Central Bank.

“Political decisions will remain dependent on data, but the deterioration of economic indicators, notably weak European growth, argues in favor of continuing this easing. Despite political tensions in France and Germany, it is unlikely that the ECB will “deviates from its line of conduct”, anticipates David Zahn, Head of European bond management at Franklin Templeton.

The consensus is clear, for a 25 basis point drop in the main key rate in the Euro Zone on Thursday. The margin is indeed comfortable for Christine Lagarde. “No economic data currently seems to indicate any rebound in activity, the French and German situations not helping. With 125 bps of key rate cuts expected by the market by next June, the ECB has the necessary weapons to put juice back into the machine”, commented Thomas Giudici, Head of bond management at Auris Gestion.

To be complete on the value side, excluding the luxury sector mentioned above, and excluding the flagship index, Klépierre is down 2.2% while JPMorgan has lowered its advice to “underweight” from “neutral”. Euroapi plunges 17.6% as the company announced the resignation of both its CEO and the chairwoman of its board of directors.

On the other side of the Atlantic, the main equity indices have calmly consolidated, like the Dow Jones (-0.35%) and the Nasdaq Composite (-0.25%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, contracted by 0.30% to 6,034 points, continuing its recovery of support on 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 $1.0520. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.90.

On the macroeconomic agenda this Wednesday, follow the consumer price indices at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The flagship tricolor index will have covered an old working band, entirely, on Friday 06/12, between 7,340 points and 7,465 points. It is this last level, constituting significant resistance, which will constitute the technical challenge of the week.

The session on Friday, December 6 is important in its construction, the length of the corresponding green candle materializing the definition of a new working framework, also upon crossing the key moving average.

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 7465.00 points would revive the buying tension. While a break of 7340.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart