CAC 40: Week under the sign of customs duties

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Operators will be able to deal this Monday with the return of benchmarks from Wall Street, closed Friday July 4 for the American national holiday. Friday, the CAC 40 lost 0.75% below 7,700 points, the vagueness prevailing about Trump’s intentions on customs duties with respect to Brussels beyond the deadline on July 09.

The American president said that he was going to send a dozen letters to the countries concerned by his customs surcharges which will vary in a range of 10-20% or even will go up to 60-70%. “We have some other negotiations, but you know, I would tend to send a letter to specify the customs duties they will pay,” he also added.

The European Union is also in this phase of negotiations with the American administration, with a view to finding an agreement before the fateful date of July 9. The president of the European Commission, Ursula von der Leyen, said he wanted a “negotiated solution”.

In addition, investors take note of hopes showered to lower federal rates in late July. And this because of a publication on the employment of excellent invoice. First education: the unemployment rate went from 4.3% to 4.1%, beating expectations. Like post creations at 143,000, when the market seemed to be tense after the publication of the FURNITIES of the ADP. Finally, the monthly increase in hourly wages is on average 0.2%.

What give credit to the attitude of delay of J Powell. D. Trump, whatever happens, will continue to put pressure, sometimes even crossing the limit of disrespect and insult, with regard to the Patrier de la Fed. According to the Fedwatch tool of the CME Group, the probabilities of a monetary easing of 25 base points at the end of this month have just collapsed, passing in an instant from 23.3% to 6.7%.

“In response to the employment report, the money markets abandoned their bets on a reduction in the Fed in July, postponing the calendar of the next decrease of 25 base points (0.25 percentage points) to October, and now expected only 50 points of flexibility this year (compared to 66 base points before publication)”, explains Michael Brown at Pepperston.

In terms of values, particularly eventful session for groups of spirits on the stock market, after the Beijing decision on brandy from the old continent. Remy Cointreau (+2.5%) and Pernod Ricard (-0.4%) escape these taxations in exchange for an LDC price increase increased by 2.4%after having announced a better-quarter turnover than expected thanks to an increase in chicken consumption over the period, and of dynamic international activity.

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 $ 1,1770. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 65.30. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.32%. As for the Vix, it was worth 17.50 at the last fence of the S&P500.

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

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. The tricolor flagship index is now in a glaring situation of incapacity for creations of new heights.

First alert Thursday, June 12 with a metal gap in session. Second the next day with a new gap, filled in the session too. The short -term configuration is gradually weakened.

The intermediate support of the 7,500 points nevertheless allowed the flagship index to find oxygen at the end of the week 26. It is already back on an intermediate resistance to 7,700 points.

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 downward scenario is valid as long as the CAC 40 rating index below resistance at 7700.00 points.

Hourly data graphics

Daily data graphics