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Somehow the CAC 40 manages to stay above the highly symbolic threshold of 8,000 points, without however showing any marked offensive inclinations on the technical level. Remember that the gap of October 2 can no longer be described as a rupture gap, since its almost immediate filling on October 6 with the announcement of the resignation of Sébastien Lecornu.
“While a new dissolution of the National Assembly seemed the most likely outcome of this situation of political deadlock, the hypothesis of a temporary suspension of the pension reform was seen as a breath of fresh air,” analyzes Alexandre Baradez (IG France)
“But a lasting easing of the risk surrounding France on the financial markets seems improbable because the initial problem, before the political instability, was that of the budgetary trajectory with an unsustainable deficit. And a temporary suspension of the pension reform would not provide any concrete solution from this point of view. It would only shift the problem.”
Above all, this political impasse prevents France from adopting a budget for 2026 and thus correcting the trajectory of its public finances. Goldman Sachs is counting on a deficit of 5.5% of GDP for this year (compared to 5.4% for the government) but above all on 5.3% of GDP for 2026, much more than the 4.7% targeted by the resigning Prime Minister Sébastien Lecornu.
The market is therefore navigating on sight against a backdrop of intense questioning about the profile of the next prime minister (left-wing?, technical?), and especially his ability to negotiate compromises for a budget with the myriad of political sensitivities in the Assembly. Otherwise, a special law will be adopted, with the renewal in 2026 of the 2025 budget to the nearest euro. Which in the eyes of the markets would obviously be disappointing from the point of view of cleaning up public accounts.
On the value side, Danone closed at the top of the CAC 40 (+4.75%). According to a market specialist, this increase is due to the fact that the group published its “aid memory” – a document which gives indications before future results – for the third quarter, with positive information on the group’s revenue dynamics. On the other side of the spectrum, Michelin fell 3.8%. The tire manufacturer gave cautious indications on its volumes during a conference call held ahead of the publication of its results. The group based in Clermont-Ferrand is followed by LVMH (-2.8%), Hermès (-2.7%). Ferrari, which is considered by some analysts as a luxury group, is falling sharply. The title of the prancing horse brand plunged 15.4% in Milan, showing its biggest drop since 2016.
On the other side of the Atlantic, the main equity indices ended Thursday’s session in red territory, like the Dow Jones (-0.52%) and the Nasdaq Composite (-0.08%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.28% to 6,735 points.
An update on other risky asset classes: around 8:00 this morning
> On the foreign exchange market the single currency was trading at a level close to $1.1570.
> The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $61.30.
> THE Treasuries 10 years, yield on federal sovereign bonds maturing in 10 years, were trading slightly above the 4.13%.
> As for the VIX, it was worth 16.40 at the last close of the S&P500.
On the macroeconomic agenda this Friday, priority should be given to preliminary data from the U.S. consumer confidence index (U-Mich).
KEY GRAPHIC ELEMENTS
While the CAC had just overcome major resistance, on a wide gap (October 2), the session of October 6 changed the situation. The gap mentioned, although ample and formed on either side of the 8,000 points, can no longer be described as a rupture gap (breakaway gap). Which strongly calls into question the scenario of an immediate bullish extension towards 8,260 points.
FORECAST
Considering the key graphical 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 crossing 8260.00 points would revive the buying tension. While a break of 7940.00 points would restart the selling pressure.
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