CAC 40: The Technical Barrier of the 7,900 points is strengthening

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After opening up sharply in the wake of a trade agreement signed between Washington and Beijing – an agreement still subject to amendments -, the CAC 40 will have seen its earnings eroding throughout the session, before switching to the red. The French flagship index begins the week on a drop of 0.43% to 7,800 points.

Sunday evening, the President of the United States, Donald Trump, and the president of the European Commission, Ursula von der Leyen, established a trade agreement reducing the customs duties imposed by the United States on European imports at 15%. Without common ground, Washington would have inflicted customs taxes of 30% on Europe from August 1.

This agreement, described as “larger” never concluded in terms of trade by Donald Trump, includes a certain number of exceptions, with products taxed at 0% on the part of the two business partners, including aeronautical equipment, equipment for semiconductors, and certain agricultural products. But not alcoholic products whose fate must be decided “in the coming days,” said Ursula von der Leyen.

The text also provides that Europeans will buy $ 750 billion in energy products from the United States and will invest $ 600 billion in the country.

“By this agreement, Donald Trump perfectly illustrates his mastery of the concept of the Overton window, which designates the range of politically acceptable subjects and arguments for the general population at a given time. By fluctuating customs duties from 4.5 to 20%, then 10%, up to 30%and finally 15%, he ended up accepting the commercial” partners “, and above all the 15% As unacceptable on April 2 is now something necessary in order to rebalance the great chessboard of global trade “, deciphers Valentin Urrutiaguer responsible for the management cross-skirt in Auris Gestion.

“By pushing the analysis more, it was by dividing his opponent that Donald Trump was able to win his standoff. Indeed, if countries like Germany and Italy (which are the main contributors to the trade surplus) were favorable to the concessions, France had expressed itself for the application of reciprocal customs duties. There is no doubt that the exchanges between the ambassadors of the European Union to ratify the final agreement.

15% is half less, therefore, than the 30% brandished at the start by the White House. But basically, wouldn’t the American president have won his trade war? This is the feeling that prevails if we coldly look at the initial commercial situation, and the bases of the new agreement.

Several reactions from French ministers, including Mr. Benjamin Haddad, Minister Delegate in charge of Europe, go in this direction. He sees it as an unbalanced agreement. His “N+2” to the government, the Prime Minister François Bayrou speaks of a “dark day” and a “submission”.

Still on the customs front, several media report that Washington and Beijing will extend the suspension of most of the customs surcharges that they had inflicted themselves. This break had been decided in May and temporarily fixed customs surcharges hitting Chinese products at 30% and those imposed on American products by China at 10%, against 145% and 125% respectively before this agreement.

In terms of values, the defense files (or whose activity depends on military demand) were under pressure after Donald Trump said that Europe would buy “hundreds of billions of military equipment” in the United States during the announcement of the trade agreement with Europe. Exoseens thus lost 3.48%, Light 2.78%, EXAIL Technologies 3.87%and Thalès 4.33%. The titles of spirits knew some setbacks like Remy Cointreau (-3.44%) or the giant Pernod Ricard (-3.49%). Forvia flies 13.43% after delivering encouraging half -yearly results, with cash flow more than twice as high as expected.

On the other side of the Atlantic, the main shares on shares The S & P500, reference barometer of appetite for the risk in the eyes of fund managers,

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 $ 1,1750. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 65.40. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.39%. As for the Vix, it was worth 14.90 at the last fence of the S&P500.

At the macroeconomic agenda this Tuesday, to follow in priority, across the Atlantic, the new job offers (JOLTS) as well as the Consumer Confidence Index (Conference Board) at 4:00 p.m.

Key graphics elements

The release of technical camisole was confirmed on 07/07, giving more meaning to the support on the mobile average at 20 days (in dark blue); And the index has just validated a phase of sweater (graphic rejection).

Now, a tidy (lateral channel) with an amplitude of 400 points is sketching, between 7,500 and 7,900 points. It is this resistance to 7,900 points that is currently tested. A test for the moment in the form of failure. A failure corroborated by the session of Monday July 28, materialized by a candle with a long red body, almost without shadow, or low.

This tidy is wide (400 points), and will constitute the expression of oscillations of the next few weeks.

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 7900.00 points would revive the tension to the purchase. While a break in the 7700.00 points would relaunch the selling pressure.

Hourly data graphics

Daily data graphics