CAC 40: freezing wind on the main financial centers

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The wind that crosses the main stock markets on the planet is freezing from the announcements of the White House on customs surcharges applying to the products entering American territory. In the case of the European Union, this surcharge is 20%. In response, Brussels could lead the offensive by focusing on taxation of digital services. In the meantime, the ambassadors of the Member States have met in an emergency. According to the White House, around fifty countries have engaged in negotiations with Washington.

“Europe plans to announce retaliatory measures soon and China has already reacted with 34% increase in its customs duties on American imports, enough to maintain climbing,” commented Natixis analysts. The new customs duties announced by Donald Trump Wednesday evening are particularly punitive for China, which has been inflicted additional rights of 34%.

Friday, the CAC 40 already hard hit, abandoned an additional 4.26%. Across the Rhine, the German flagship index plunged 4.95%.

Oliver Blackbourn, multi-active portfolio manager at Janus Henderson, explains why this trade war is not beneficial for anyone: “Even the US administration is ready to admit that customs duties will probably not be beneficial for the short-term economy. The probabilities of recession having already increased before the Day Liberation and the applied rates being higher than expected, it is necessary to expect consensus evaluate an even greater possibility of contraction of the American economy, as well as increased fears for the rest of the world. “

“In the United States, we fear that inflation is not pushed upwards, suppliers refusing to reduce their costs and retailers being forced to increase their prices. A lower dollar did not play the role of shock absorber that many supposed a few months ago. After adjustment to take into account inflation, income is already compressed and we fear that customs duties Building a contraction in actual consumption spending, which constitute the backbone of the American economy.

In this context, a look at employment health in March Friday became an accessory. Note however that, among the main conclusions of the NFP report (Non farm payrolls), the unemployment rate came up slightly to 4.2% of the active population. The number of job creations in the private sector (excluding agriculture) has emerged at 228,000, very much beyond expectations.

In terms of values, the bank, automotive equipment, and petroleum services suffered particularly on Friday, in the image without exhaustiveness of Société Générale (-10.40%), Forvia (-6.87%) or Vallourec (-8.08%).

On the other side of the Atlantic, the main shares on shares have plummeted, the Dow Jones losing 5.50% and the Nasdaq composite 5.82%. The S & P500, a reference barometer of appetite for the risk in the eyes of fund managers, plunged almost 6% to 5,074 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 $ 1,0,950. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 60.10. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 3.92%. As for the Vix, it was worth 45.30 at the last fence of the S&P500.

At the macroeconomic agenda this Monday, to follow in priority the index felt of investor confidence in the euro zone at 10:30 am.

Key graphics elements

The technical framework is upset, with a break in the psychological pivot threshold of the 8,000 points at the end of the week 13. Rupture which was followed by intense clearances, in powerful volumes. The GAP of January 16 is now fully filled, without any reaction from the courses. Worse, a crossing part (7,552 – 7,585 points). In two sessions, Thursday 03 and Friday 04 April, the flagship index lost nearly 520 points, and switched to the red for its assessment since 01/01.

FORECAST

In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.

This lowering scenario is valid as long as the CAC 40 rating index below resistance at 7690.00 points.

Hourly data graphics

Daily data graphics