CAC 40: Powell Galvanise Wall Street

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Definitely, the month of August will have been, unlike a widespread idea, the theater of important and significant movements on the CAC 40. After the air hole suffered at the turn of July, which redefined the entire amplitude of a horizontal channel of 400 points, the tricolor flagship index has drawn a candle in harami bullish, premises of a catch -up movement. The CAC is now confronting a major technical threshold again, that of the 7,900/7 950 points.

Supported by the remarks of the President of the American Federal Reserve (Fed), Jerome Powell, during his intervention much awaited by the market during the Jackson Hole symposium, the CAC 40 won Friday 0.40% at 7,969 points, in volumes however still limited during this period of holidays for many operators.

In essence, the central banker opened the door to a drop in rates next September, without firmly engaging in this path.

The United States is approaching the moment when the FED will have to lower its interest rates to support employment, said on Friday August 22, the president of the central bank Jerome Powell in a long-awaited speech, especially by Donald Trump. A “rapid” degradation of the American labor market is not to be excluded and could “justify” a relaxation of monetary policy, and therefore of interest rates, warned the boss of the institution from the meetings of Jackson Hole, in Wyoming (West).

He adds that the Fed is in a “delicate situation” because the new customs duties set up by the American executive begin at the same time to affect the prices paid by consumers at the risk of reviving inflation.

“Even if, within the framework of the new framework, the Fed will no longer target an average inflation of 2 % in the long term, the central bank seems ready to act with force to guarantee that long -term inflation anticipations remain well rooted in the objective of 2 %. We interpret this as the possibility for the Fed to tolerate a moderate overtaking of inflation after a period when inflation was permanently lower than the objective, The inflation adopted by the Fed in 2012 “, analyzes Richard Clarida, Global Economic Advisor for Pimco.

After Jerome Powell’s declarations, market operators are more confident in a drop in the EDF key rates at its next meeting on September 16 and 17. According to the CME Group’s Fedwatch tool, investors attribute a probability of 91.2% to a cup of 25 bass points, a figure which was less than 70% before the speech of the central banker.

On the values ​​side, almost all of the CAC 40 files finished in the green, carried by the cyclical values. Stmicroelectronics won 4.7%, Stellantis 4.4% while luxury groups Kering and LVMH won 2.5% and 2.1% respectively. Air Liquide, which has announced its greatest acquisition in ten years with the acquisition of Korean Dig Airgas, fell 0.1%.

On the other side of the Atlantic, the main shares on shares have accelerated strongly on Friday, like the Dow Jones (+1.89%), and the Nasdaq Composite (+1.88%). The S & P500, a reference barometer of appetite for the risk in the eyes of fund managers, gained 1.52% at 6,466 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 $ 1,1720. The barrel of WTI, one of the barometers of appetite for the risk on the financial markets, was exchanged around $ 63.70. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.27%. As for the Vix, it was worth 14.22 at the last fence of the S&P500.

At the macroeconomic agenda this Monday, to follow the IFO index of the business climate in Germany at 10:00 am, as well as sales of new housing in the United States at 4:00 p.m.

Key graphics elements

The main technical issue of the week is the emancipation of courses compared to the high terminal of a large range to 7,950 points. If necessary, acceleration of courses towards 8,260 points is possible.

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 index rating above the support at 7940.00 points.

Hourly data graphics

Daily data graphics