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The atmosphere was somewhat refreshed in the second part of the session on Thursday, by Christine Lagarde’s comments at a press conference after the widely expected decision to lower the Euro rent by 25 basis points. The CAC ended symbolically in the red, in reality in balance (-0.03% at 7,420 points), reinforcing the role of intermediate resistance of the 7,465 points.
“A fourth consecutive drop in 2024 and a loosening of rates which should continue next year,” notes Grégoire KOUNOWSKI, Investment Advisor at Norman K. “Since the American presidential elections and the publication, in parallel, of poor economic indicators in the euro zone, the markets were pleading for a reduction in order to stimulate the economy of the Old Continent.”
The scenario of a drop of 50 basis points, which without holding the rope was part of the universe of possibilities, was therefore ruled out. This probability had in any case clearly “fallen due in particular to moderate declarations from members of the ECB, including Isabel Schnabel, indicating that central bank measures do not resolve structural problems. “I would warn against too much development, that is to say towards an accommodating territory. I do not think that this is appropriate in the current perspective” she declared a few days ago in an interview with our colleagues from Bloomberg”, noted Alexandre Baradez (IG France).
However, Christine Lagarde did not avoid “the risk of increased frictions in world trade”, which could “weigh on the growth of the euro zone by reducing exports and weakening the world economy”. The ECB has also revised downwards its growth and inflation forecasts from 2024 to 2026.
“As expected, she did not make a commitment on a future direction of monetary policy and did not suggest that a further rate cut was planned for January. Given the high degree of political uncertainty and economic, the ECB maintains its dependence on data and its case-by-case approach for each meeting”, acts Ulrike Kastens, European economist DWS, who [continue] to think that the ECB is on a trajectory of rate cuts.
“Although growth forecasts have been revised downward, risks to the economy are not yet fully reflected in GDP projections. This is expected to be gradually corrected in 2025. We expect another rate cut in January and others will follow. We anticipate that the ECB will reduce the deposit rate to 2% in 2025.
On the value side, Sopra Steria fell 9.9% after revealing cautious medium-term growth targets. DBV Technologies limited its gains to 7.6% after announcing that it had agreed with the American health authority on the next steps to be taken to obtain approval for its patch treating peanut allergy in young children. . Technip Energies dominated the debate on compartment A, with a closing increase at the high points of the session (+3.86%).
On the other side of the Atlantic, the main equity indices fell slightly, like the Dow Jones (-0.53%) and the Nasdaq Composite (-0.66%). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, lost 0.54%, preserving the psychological 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 $1.0460. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $69.80.
On the macroeconomic agenda this Friday, to follow French industrial production as a priority at 11:00 a.m.
KEY GRAPHIC ELEMENTS
The flagship tricolor index will have traveled 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.
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