CAC 40: The Fed revises its growth forecasts downwards

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The CAC 40, supported by Schneider Electric, managed to grab 0.70% to 8,171 points on Wednesday. A market still supported by the vote by the Bundestag, the lower chamber of the German parliament, of the reform of the so -called “debt brake” mechanism. This reform constitutes a prerequisite for the proper implementation of the mega investment plan of several hundred billions of euros in defense and infrastructure.

The ball is now in the Bundesrat camp, the upper room, which will have to rule on this same level on Friday. Deutsche Bank expects this vote to find a positive outcome. However, the great unknown remains the future decision of the German Constitutional Court, points out the German bank, even if there again it judges that the institution should approve the reform.

In perspective therefore, massive investment expenditure in infrastructure, for companies from the entire euro area, and in defense.

“The European Defense sector is part of a new era of investment and strategic autonomy. Faced with the increase in geopolitical risks and uncertainty about the support of the United States, European nations take proactive measures to build a more robust and self-sufficient military ecosystem. Despite financing difficulties, the increase in budgets, technological investments and commitments to NATO renders this Aneeka Gupta, Director, Macroeconomic Research, Wisdomtree.

In the statistical chapter, concerning the indices of consumer prices in the euro zone published at the end of the morning, no surprise to report, prices increased by 2.6% in annual rate in final data for February, excluding volatile elements (food, alcohol, tobacco, energy).

Let us recall, the day before, the strong progression of the Zew index in March. “This improvement in the economic climate is probably explained by positive signals concerning the future German fiscal policy, such as the financial agreement of several billion euros for the federal budget. The prospects have notably improved for manufacturers of metals and steel, as well as for the mechanical construction sector. Finally, the sixth consecutive decrease in interest rates by the ECB is reflected in favorable funding conditions and companies, “said the president of the Zew Achim Wambach.

The Fed was completing a meeting of its monetary policy committee yesterday. As expected, the monetary institution has left its rates unchanged, while playing the balancingists for its future intentions, due – and it is very legitimate – a lack of visibility. J Powell spoke of “unusually high uncertainty”. Economic anticipations, updated each quarter, have been lowered. + 1.7 % growth against 2.1 %, 2.7 % inflation, compared to 2.5 % in the last projections and 4.4 % unemployment at the end of 2025, against 4.4 %.

Side values, CAC 40 was worn by Schneider Electrichis second highest weighting in his calculation. The action resumed 2.9% supported by Royal Bank of Canada who noted his council on the title in “outperformance”. Excluding CAC 40, Option has contained its withdrawal at 2.4% while UBS lowered its opinion to “sell” on the title. Assystem rendered 5% after delivering prospects for 2025 deemed cautious by the market.

On the other side of the Atlantic, the main shares on shares finished the Wednesday session in the green, like the Dow Jones (+0.92%) and the Nasdaq Composite (+1.41%). The S & P500, a reference barometer of appetite for the risk in the eyes of fund managers, appreciated 1.08% to 5,675 points.

A point on the other asset classes at risk: around 8:00 am this morning on the exchange market, the single currency was treated at a level close to $ 1,0890. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 67.30. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.23%. As for the VIX, it was worth 19.90 at the last fence of the S & P500.

At the macroeconomic agenda this Thursday, to follow in priority the weekly registrations for unemployment benefits and the Philly Fed of the health of industrial activity in the United States at 1:30 p.m.

It should be noted that the east coast of the United States has passed in the summer hour. Consequently, and while waiting for mainland France in turn, Wall Street will open at 2:30 p.m., instead of 3:30 p.m. usually.

Key graphics elements

The tricolor flagship index is typically in the consolidation phase, between the 8,000 symbolic points and the historical summits which it has just brushed. The latter will day for the coming months an intermediate level of resistance, to which the index will attack when it has accumulated enough energy. Only a brutal break in the 7,810 points would ring the alarm.

Consequently, work between 7,810 and 8,000 points in the coming weeks is the graphic scenario of favorite. Scenario fully confirmed by the rupture, in growing volatility, of the 8,000 points on March 11. The RSI, an oscillator for breathtaking movement, is still far from its occurrence zone.

Under the 7,810 points, the technical situation would deteriorate somewhat, with in particular the effect of attraction of gaps formed in January, especially that of the 16, very large.

FORECAST

In view of the key graphic 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 a crossing of the 8260.00 points would revive the tension to the purchase. While a rupture of the 8030.00 points would relaunch the selling pressure.

Hourly data graphics

Daily data graphics