CAC 40: Market annoyance

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Austerity, why not … but the lack of political visibility, that no! This is in essence the message that the market sent last week, losing 3.34%, as a vote of trust approaches on September 08, engaging the responsibility of the Bayrou government. A vote which, arithmetically speaking, is lost.

Among the scenarios that the market envisages, a resignation of the government, followed by an appointment of a new Prime Minister, to the different political color. Unless a new dissolution of the National Assembly rebuts the cards. A scenario whose probability is estimated at 65% by Wilfrid Galand, Director – Strategist at Montpensier Finance.

“Volatility could then be strong, according to the various surveys and up to the elections (which must be held within a minimum of 20 days and 40 days maximum after the dissolution decree. It could affect all the assets of the euro zone including the single currency, with France always on the front line. An output of the yield at 10 years from the OAT to 4% is a risk.”

It is currently exceeding 3.51%, compared to 2.72% for its German counterpart and 3.43% for Greek …

“The announcement of a vote of confidence on September 8, has been blowing a wind of concern about French assets (high increase in the rate 10 years, spreat of the Spread Oat-Bund and decrease in CAC 40), while opposition parties have already announced not to trust the government, whose fall thus seems likely, which could lead to a degradation of the French debt note by Fitch on September 12 Chapon, from Arkéa Asset Management.

In the statistical chapter, investors took note of the publication of the PCE index, the favorite gauge of the American Federal Reserve (Fed) to measure inflation. The publication has not reserved a big surprise. Over a year, the increase in the “Core” index, that is to say excluding food and energy prices, has registered 2.9%, online with the expectations of economists interviewed by the Wall Street Journal.

The most penalized values ​​over the whole week are linked to domestic issues, massively depend on public expenditure or hexagonal taxation. This is the case with construction, concessions, bank, air. Among the strongest social declines Société Générale (-8.85%), ADP (-9%), Vinci (-10.1%) and Eiffage (-14.6%).

On the other side of the Atlantic, the main shares on shares finished the Friday’s session down, before an extended weekend, this Monday being unemployed at Wall Street for the Labor Day. The Dow Jones lost 0.20% when the Nasdaq Composite reflected 1.15%, digesting the publication of Nvidia. The S & P500, a reference barometer of appetite for the risk in the eyes of fund managers, lost 0.64% to 6,460 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 $ 63.80. THE Treasuries 10 Yearsyield of federal sovereign bonds due to 10 years, was negotiated slightly above 4.24%. As for the Vix, it was worth 15.36 at the last fence of the S&P500.

At the macroeconomic agenda this Monday, to follow the final data of PMI industrial activity barometers in priority in the area at 10:00 am.

Key graphics elements

The vast tidy (lateral canal), whose amplitude was once again redefined on July 31 and August 1, retains meaning, and the discharge of courses on Monday August 25, in contact with the high terminal confirms it. The 7,500 points are reinforced in their support role as much as the 7,940 points are in their role of resistance. They are therefore intervention areas to favor, in this clearly bipolarized market.

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 7940.00 points.

Hourly data graphics

Daily data graphics