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Only 13 stocks out of 40 in our national flagship index ended the session in the green on Tuesday, but this will have ended up ensuring a symbolically positive daily balance, of +0.12%, thanks to the support of the essential sector of luxury, and Sanofi. The pharmaceutical giant’s action ended up 3.29%, after the announcement, with its partner Teva, of satisfactory results from a phase 2b clinical trial for duvakitug, a potential treatment against ulcerative colitis and the disease of Crohn’s.
The technical threshold of 7,340 points was therefore preserved on the eve of the end of the last FOMC of the year.
The Fed should, in all likelihood, and barring any major surprises, lower the yield on its Fed Funds by 25 basis points. It’s a given. It will be interesting to note the inflections in the elements of language used in the press release and during the press conference.
“But, while the cycle of rate cuts began only a few months ago, it could already be paused at the beginning of 2025. Why?” asks Alexandre Baradez (IG France). “Because the main price indexes in the United States have not made further progress towards the objective for several months and the American economy continues to display insolent health. The Atlanta Fed which regularly updates its forecast for American growth during the quarter, based on data published each day, estimates that it will be…3.3% in the fourth quarter (and it has continued to revise this forecast upwards since November).”
The publication of PCE prices, the Fed’s preferred measure in its assessment of price dynamics, on Friday, will constitute the highlight of the week.
“Finally, even if the Fed still does not know the details of Donald Trump’s future economic policy, it has some clues if it refers to the previous mandate and the statements of the new president in recent weeks. Which could favor, here too , a form of procrastination by the Federal Reserve in the coming months,” continued M Baradez.
In the meantime, operators have dealt with monthly retail sales across the Atlantic. rose 0.7% over one month, compared to an increase of 0.5% anticipated by the consensus. These figures should not call into question a rate cut which should be decided at the end of the meeting of the American Federal Reserve. The outcome is scheduled this evening at 8:00 p.m. (Paris time) for the monetary policy decision and for economic projections, and at 8:00 p.m. for the press conference.
To be complete on a statistical level, two important German indicators should be noted: firstly, the IFO index, measuring investor confidence in the Euro Zone’s leading economy, came out slightly below expectations, at 84, 7. “The weakness of the German economy has become chronic” can be read in a comment as cold as it is laconic accompanying the results of the survey.
The ZEW index then, a so-called economic sentiment index, came out above particularly pessimistic expectations, at 15.7 points. “With early elections looming in Germany and the resulting expectations of an economic policy encouraging private investment as well as the prospect of further interest rate cuts, the economic outlook is improving,” according to the president of ZEW, Achim Wambach.
On the other side of the Atlantic, the main equity indices ended Tuesday’s session in the red, like the Dow Jones (-0.61%) and the Nasdaq Composite (-0.32%). . The S&P500, the reference barometer of risk appetite in the eyes of fund managers, returned 0.39% while preserving the threshold of 6,000 symbolic 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 $1.0510. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $69.60.
On the macroeconomic agenda this Wednesday, to follow as a priority the outcome of the Fed’s FOMC at 8:00 p.m. Also to be followed are the final data on consumer prices in the Euro Zone (November), and housing starts and building permits in the United States at 2:30 p.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.
The 7,340 points are already under pressure. A clean break would quickly return the index to 7,200 points.
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 7465.00 points.
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