CAC 40: Sino-American talks and inflation on the menu

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If we had to spin a metaphor to describe the psychology of the current market, it would be that, resulting from the physical sciences, from a system to balance. If we do the “balance of forces”, we would have on the one hand the hope of seeing the Sino-American trade talks end on a note if not positive, at least constructive; and others by latent anxiety pending concrete developments on this customs front. And these forces balance perfectly.

Deutsche Bank notes that the President of the United States Economic Council, Kevin Hassett, told CNBC to expect “any control of American exports to be relaxed and that rare land will be released in volume”, after these negotiations.

“This therefore suggests a potential compromise in which the United States would relax its export controls in exchange for China easing by its own restrictions on rare earths,” concludes Deutsche Bank.

Chinese rare lands are a key issue in negotiations, the United States hoping that the pace of the expeditions of these strategic metals, which has slowed down since the US President launched his World Trade War, be restored, said AFP.

In the statistical chapter, little to put in the tooth yesterday morning, apart from the index of investors confidence in the euro zone, came out in light although still in negative territory at -5.3 points.

The operators digest while waiting for the solid federal report on employment published on Friday. Here are the main lessons as a reminder: the unemployment rate first of all, remains stable at 4.2% of the active population. Average time wages are growing a little more than anticipated (+0.4%), and above all, job creations in the private sector, at 139,000, above expectations, completes a solid portrait of employment. What to put into perspective the somewhat alarmist publication of the ADP cabinet a little earlier last week. And above all enough to bring down the pressure on Jerome Powell’s shoulders, which has been undergoing presidential pressure since the start of the mandate of Trump to soften the rates.

On the values ​​side, car groups and equipment manufacturers accelerated up in early afternoon. At the top of the CAC 40, Stellantis jumped 5%, when on the SBF 120, Forvia resumed 7%, Valeo 4.1%and Opthobility 3.9%. Still on the SBF 120, Mercialys took 2.2% after announcing the acquisition of an important Lyonnais shopping center, showing that the company revives asset purchases.

On the other side of the Atlantic, the main shares on shares ended the Tuesday session in the green, like the Dow Jones (+0.25%) and the Nasdaq Composite (+0.63%). The S & P500, reference barometer of appetite for the risk in the eyes of fund managers, nibbled 0.55% to 6,038 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 $ 1,1410. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 64.25. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.48%. As for the Vix, it was worth 16.95 at the last fence of the S&P500.

At the macroeconomic agenda this Wednesday, to follow in priority consumer prices in the United States at 2:30 p.m.

Key graphics elements

The gradual cap under the 7,900 points has suddenly turned into intense volatility. In one session Friday, May 23, the Parisian flagship index broke the Dynamics of the spring rally by breaking the mobile average at 20 days (in dark blue), the difference compared to the mobile average at 50 days (in orange) has taken up strongly.

The 7,900 points are reinforced in their status of graphic resistance, even though the dynamics of the relative force index invite caution. Indeed the RSI (Relative Strenght Index) Adopt a persistent lowering bias since May 13. Note the significant relaxation of the VIX (the fear index), under the 17 points.

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 7810.00 points would revive the tension to the purchase. While a break in the 7690.00 points would relaunch the selling pressure.

Hourly data graphics

Daily data graphics