CAC 40: American consumer prices, THE statistic of the day

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Clearly, the 7,500 points constitute a force of graphic resistance which is gaining strength. Yesterday the flagship index of the Paris Stock Exchange, the CAC 40, fell upon contact with it, still managing to preserve 0.20% at the close at 7,423 points. Note in compartment A of the rating, very strong rebounds in high Beta securities, sensitive to the customs issue, in the automotive equipment sector in particular. Thus, Michelin increased by 2.72%, the former Plastic Omnium (OPMobility) gained 7.10% and Forvia (formerly Faurecia), +8.48%.

On Monday evening, the Bloomberg news agency reported that the Trump administration was considering phasing in tariff surcharges of 2% to 5% per month, rather than implementing them all at once. This process would make it possible to avoid a peak in inflation and would give negotiating power to the United States, according to close sources cited by the agency. Bloomberg specifies that this project is only in the preliminary stages and that it has not been presented to Donald Trump.

On a statistical level, before the highly anticipated CPI (consumer prices) this Wednesday, it was the turn of the IPP (producer prices) to come under the grill this Tuesday. Excluding food and energy, these prices, which constitute an advanced barometer of inflation, are stable, a pleasant surprise compared to the consensus of +0.2% monthly. Anything that can soften the trajectory of the Fed’s “hawkish” turn is good for the markets, particularly for the most highly valued assets…

Not enough in any case to calm the ardor of the American 10-year, which crossed the 4.80% mark.

To be complete on the value side, Safran increased by 1.6%, supported by an increase in its recommendation to purchase from Jefferies, which sees an interesting entry point with the decline in the stock that has occurred since the beginning of December.

On the other side of the Atlantic, the main equity indices ended Tuesday’s session in disorganized order, the Dow Jones gaining 0.52% as the major banking groups’ results season approaches, and the Nasdaq Composite contracting by 0.23%. The S&P500, a barometer of risk appetite in the eyes of fund managers, ended on a stable note at 5,842 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 $1.0290. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.10.

On the macroeconomic agenda this Wednesday, priority should be given to consumer price indices in the United States. Prices are expected to increase by 2.9% year-on-year, compared to 2.7% last month, for the broadest basket of products. Also to be followed, industrial production in the Euro Zone at 11:00 a.m., the “Empire State” manufacturing index at 2:30 p.m. as well as crude oil stocks at 4:30 p.m.

KEY GRAPHIC ELEMENTS

The CAC 40 index came to test on Monday 06/01 at the close of an important graphic level, 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.

Below 7,500 points, once again the challenge of the week, the pressure is high.

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