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An important statistic on prices across the Atlantic will have allowed the indices, on both sides of the Atlantic, to take a breather. Note, however, that the 7,500 points continue to constitute a level of graphic resistance, and this since the gap of October 30.
Consumer prices in the United States last month, excluding food and energy, increased “only” by 0.2%, compared to 0.3% expected. Enough to allow a welcome relaxation on the American 10-year, close to 4.70%. It exceeded 4.80% as a reminder at the end of last week following the publication of a very solid report on employment.
The price figures which have just been published, although reassuring, will not however revolutionize the monetary policy strategy of the Fed, which remains “forced” to be patient, against a backdrop of impressive resilience of the leading economy of the planet. However, these figures allow us to hope, and not to bury, the prospect of two reductions of 25 bps this year, for the remuneration of Fed Funds. Instead of only 25 bps.
On an annual basis and for the broadest basket of products, inflation stands at 2.9% across the Atlantic. Published on Tuesday, excluding food and energy, “producer” prices, which constitute an advanced barometer of inflation, came out stable, a good surprise compared to the consensus of +0.2% monthly.
“The good news from this report on inflation is that after three months of stagnation at 3.3%, underlying inflation resumed its downward movement in December (3.2%). This is clearly good news for the Fed”, judges Bastien Drut, of CPR AM.
“It should be noted that the rise in stocks was also fueled by strong corporate results, particularly in the banking sector. The results of financial giants such as JPMorgan, Wells Fargo and Goldman Sachs, which exceeded market expectations , have contributed to strengthening investor confidence”, underlines Quasar Elizundia strategist at Pepperstone.
On the value side, Bureau Veritas gained 2.02% to 30.30 euros while the company is in discussions with its Swiss rival SGS with a view to a potential merger. Such an operation would make it possible to generate synergies and effects of scale but it would also entail significant risks. JCDecaux rose 1.7%, supported by JPMorgan which raised its advice to “neutral” from “underweight” previously. The specialist in cabling solutions Nexans rebounded by 4.1% after announcing a new project as part of the framework contract signed in spring 2023 with TenneT, the manager of the Dutch electricity network.
On the other side of the Atlantic, the slight easing in the bond market will have allowed risky securities with high PER to gain height. The Dow Jones gained 1.65% and the Nasdaq Composite, with its strong technological coloring, 2.45%. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, appreciated by 1.83% to once again approach the threshold of 6,000 points, at 5,950 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 $79.20.
On the macroeconomic agenda this Thursday, priority will be given to retail sales in the United States at 2:30 p.m. Also to be followed at the same time are weekly registrations for unemployment benefits. Earlier today at 11:00 a.m. the monthly balance of the trade balance in the Euro Zone will be revealed.
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 identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that crossing 7500.00 points would revive the buying tension. While a break of 7200.00 points would restart the selling pressure.
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