CAC 40: Trump brandishes the threat of 30% customs duties against the EU

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It will first be noted that in spite of the character for the least public holiday of the day (national holiday!), The Paris Stock Exchange will remain open, and this in usual conditions of schedules and quotes. Mechanically, exchanges should be done in reduced volumes.

The markets will have to digest the new development in the trade war led by Trump against the rest of the world, and particularly against Brussels. The tenant of the White House now brandishes customs duties in the amount of 30% on imports from the member countries of the European Union. In the meantime, negotiations continue, with additional pressure.

“President Trump continues to sow disorder with the use of customs duties as a weapon to try to stimulate the production of goods in the United States, but also as a political weapon against countries that could take measures seen by the American president as going against the interests of the United States,” notes Sebastian Paris Horvitz of LBPAM.

At the end of last week, Donald Trump threatened in particular to establish additional 35% customs duties on imports from Canada.

“Obviously, this threat, if it were implemented, would have a limited scope since a large part of the trade between the two countries remains ‘protected’ by the free trade treaty between the United States, Canada and Mexico,” said Sebastian Paris Horvitz.

The Parisian index (-0.92% on Friday) had, previously, chained four consecutive increases in increase, amount on hopes of customs surcharges at a lower cost for Europe. This upward sequence allows the CAC 40 to record appreciable gains of 1.73% over the whole week. An opening in the red is scheduled for Monday.

“European customs duties are equivalent to those of China but Europe is less innovative and will therefore undergo the shock. Innovation allows a stronger responsiveness and greater capacity to dispel this shock. Draghi showed us how much Europe lacked capacity to innovate. We will be more affected than China”, analyzes Philippe Waechter, chief economist at Ostrum Asset Management.

Statistically, operators will have noted the monthly price increase in France by 0.4%, slightly above expectations (+0.3%), which allowed them to augur stable inflation in France.

On the values side, luxury, after returning colors in recent weeks, has dropped down. Kering dropped 3.7%, LVMH lost 3.4%, Hermès abandoned 1.5%, despite the very good publication of the Italian Brunello Cuccneli. Excluding CAC 40, Kaufman & Broad rendered 4.95% after publishing its half -yearly results and expressed stable housing reservations over one year in value.

On the other side of the Atlantic, the main shares on shares finished the Friday session in the red, like the Dow Jones (-0.63%) and the Nasdaq Composite (-0.22%). The S & P500, a reference barometer of appetite for the risk in the eyes of fund managers, lost 0.33% to 6,259 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 $ 1,1660. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 68.50. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.42%. As for the Vix, it was worth 16.40 at the last fence of the S&P500.

At the macroeconomic agenda this Monday, to follow the start of the Eurogroup meeting in priority.

Key graphics elements

The release of the technical camisole is confirmed, coming to give more meaning to the supporting of the mobile average at 20 days (in dark blue).

The buying position on the spot can be kept as long as the oscillations are built between this trend curve and the high bollingger strips (20; 2.5).

The relative force index (RSI) is in full convergence with the courses.

Negative opinion on the scale of the only session to come.

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 7895.00 points.

Hourly data graphics

Daily data graphics