CAC 40: The Fed forced to be patient

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In the absence of the “Wall Street” compass, the CAC 40 will have finally experienced a very technical session on Thursday, gaining 0.51% only to fail against a resistance zone which is asserting itself: that of 7,500 points. The market looked to two German statistics that beat expectations to find some comfort at the top of tidywith November’s trade surplus at nearly 20 billion euros, and the sustained increase in monthly production volume.

Wall Street exceptionally did not open its doors, due to the national day of mourning declared following the death last month of President Jimmy Carter, at the canonical age of 100.

In the background, the market is still monitoring the evolution of bond yields. In the United States, rates on sovereign bonds have experienced a feverish surge since October, with the yield on the 10-year security approaching 4.7% (4.655% currently). This is due to fears of persistent inflation which would push the American Federal Reserve (Fed) to slow down or even stop its rate reductions.

A publication could well, if necessary, that is to say in the event of deviations from the consensus, further move the bond barometer: the publication, this Friday of the federal report on private employment, the famous NFP report (No Farm Payrolls), for the month of December. Operators had several “tastes” throughout the week, and it must be said that all campaigned for unfailing resilience and solidity of employment (new JOLTS offers, registrations for unemployment benefits, cabinet survey ADP).

The strength of employment, combined with Trump’s anti-immigration policy, is mechanically likely to support wages, and therefore prices… And therefore to force the Fed to be patient in its monetary easing process.

Verdict this Friday at 2:30 p.m. Some benchmarks to know in advance: the unemployment rate is expected to be stable at 4.2% of the active population, job creation in the private sector excluding agriculture is expected at 164,000 in December, compared to 227,000 in November. Finally, the dynamics of average hourly wages is expected to slow slightly, to +0.3% in December, compared to +0.4% in November.

On the values ​​side, Teleperformance posted the biggest increase in the CAC 40 at the close, with an increase of 3%, followed by the newly promoted Bureau Veritas (+2.7%) while Renault finished bottom of the flagship Parisian index ( -2.8%). Outside the CAC 40, DBV Technologies soared 53.3% after reporting encouraging clinical data for its Viaskin Peanut patch. Still in the field of biotechnologies, Maat Pharma closed up 13.2%, driven by its advances in acute graft-versus-host disease.

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 $1.0280. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $73.80.

On the macroeconomic agenda this Friday, to follow in priority the NFP report on American private employment at 2:30 p.m. The day will begin on the statistics side with two French benchmarks at 8:45 a.m.: industrial production and consumer spending.

KEY GRAPHIC ELEMENTS

The CAC 40 index came to test an important graphic level on Monday at the close, 7,465 points, the solidity of which will be tested. The general working base remains, until proven otherwise, a vast band between 7,200 and 7,465 points, within which an indecision marked by nervousness is expressed. The hanged man candle drawn on Wednesday on this resistance level testifies to the difficulties of franking, in a market which remains tense.

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 7500.00 points.

Hourly graph

Daily Data Chart