CAC 40: open way beyond 8000 points

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European markets are preparing to open in the red this Wednesday, caught up in the nervousness that dominated Wall Street last night. The previous session had however shown a striking contrast: while European places were offered a solid rebound carried by the cyclical values and the found vigor of luxury, the American scholarship has sinned under the weight of its technological giants.

In Europe, investors had found appetite for the neglected sectors in recent weeks. LVMH, Kering, Hermès and L’Oréal led dance, joined by Pernod Ricard and Rémy Cointreau, well oriented in wines and spirits. This alarm clock allowed Paris and other places on the continent to appear up markedly. But this renewed optimism also highlighted a brutal adjustment: the values of the defense have won, sanctioned by the anticipations of a possible appeasement on the Russo-Ukrainian front. Thales, Rheinmetall and their European counterparts have seen investors reduce their exposure to a sector that had largely benefited from the geopolitical climate in recent months.

On the other side of the Atlantic, the atmosphere was very different. Technological values led to the decline, victims of a double discomfort. On the one hand, a university report (MIT) recalled that the majority of companies have yet drawn any tangible return from their investments in artificial intelligence. On the other, influential votes from the sector, including Sam Altman, warned against a possible speculative bubble. Nvidia, Palant, AMD or Microsoft have gave way, causing the entire Nasdaq and, by ricochet, the S&P 500. This correction occurs even though the valuations are reaching historically tense levels, reviving doubts on the market capacity to prolong its bull cycle.

This fragility of the American clues is part of an already busy context. All eyes converge on Jackson Hole, where Jerome Powell must express themselves at the end of the week. The probability of a drop in rate in September remains high in the spirit of the markets, but uncertainty remains total as to the trajectory of the next months. The political climate still complicates the situation: Donald Trump multiplies attacks against the Fed, demanding more marked declines, while hammering his positions on international trade. If Sino-American relations seem temporarily stabilized, firmness towards India and persistent tensions with Russia maintain an unstable backdrop.

At the microeconomic scale, Home Depot surprised positively with an increase of 1 % of sales comparable in the second quarter, after a marked decline last year. The dynamics accelerated in July (+3 % in the United States), carried by small renovation projects and the increase in online sales. The brand thus gains market share and confirms its annual objectives. The title jumped more than 3 %, contrasting with the weakness of the technological sector.

The day will be punctuated by several important milestones. In Europe, attention will focus on the monthly inflation and the discourse of Christine Lagarde, likely to influence anticipations of monetary policy. In the United States, operators await the publication of the Fed minutes, which should specify the state of mind of the Jackson Hole committee. Finally, the results calendar remains animated with Target, Estée Lauder, Lowe’s, TJX Companies, Analog Devices, Baidu and Raymond James.

The opening therefore promises to be cautious in Europe, wedged between the recent euphoria of cyclics, the persistent fragility of American tech and the feverish expectation of a Fed speech which could set the tone for the start of the school year.

Key graphics elements

Technically, the index has just crossed the high terminal of its consolidation range, carried by an impulsive candle. Operators will now be able to wait a return to this level of the 7,950 points in order to validate the support role, before considering a resumption of the upward trend towards 8,200 points.

FORECAST

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

This bullish scenario is valid as long as the CAC 40 rating index above the support at 7941.00 points.

Hourly data graphics

Daily data graphics