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The CAC 40 index remained quietly below a resistance zone made up of absolute highs yesterday, on the eve of the Moody’s agency’s verdict on the French rating.
“It is worth remembering that at Moody’s, France benefits from the Aa3 rating with a “stable” outlook. In a gradual rhythm of adjustment, a rating agency first lowers the outlook, moving it from “stable” to “negative”, then secondly, decides to downgrade the rating if no improvement in the outlook is noted”, recalls Alexandre Baradez, head of market analysis at IG France.
Until now, the “sanctions” of the rating agencies have weighed more on the single currency than on stocks, with the CAC even enjoying the luxury of registering new historic highs.
“But on Friday, Moody’s could well decide to skip the outlook lowering step and go straight to downgrading the rating. Indeed, a rating agency can lower a credit rating without first changing the outlook. S&P, Moody’s or Fitch can lower a rating due to sudden events (such as financial difficulties, policy changes or market shocks) without first adjusting the outlook.
On the international political side, the session was marked by the confirmation (but not immediately!) of a meeting between Xi Jinping and Donald Trump next week and new American sanctions against two Russian oil companies, namely Rosneft and Lukoil, including a freezing of their assets in the United States and a ban on American companies from trading with them.
“These are the first significant American sanctions against Russia introduced since Trump’s return to the White House in January and they mark a radical change in tone compared to last week, when the two parties mentioned a possible meeting in Budapest between Trump and Putin” to discuss the Ukrainian file, underlines Deutsche Bank.
On the values side, the market has mainly dissected a host of publications. If Kering (+8.4%) jumped again, after delivering less bad activity than expected in the third quarter, Dassault Systèmes (-12.8%), STMicroelectronics (-13.61%) and to a lesser extent Carrefour (-3.8%) all three disappointed. Valeo (+8%) has convinced.
On the other side of the Atlantic, the main equity indices ended the session in the green, like the Dow Jones (+0.31%) and the Nasdaq Composite (+0.89%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.58% to 6,738 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 $1.1600.
> The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $61.50.
> THE Treasuries 10 years, yield on federal sovereign bonds maturing in 10 years, were trading slightly above the 3.99%.
> As for the VIX, it was worth 17.30 at the last close of the S&P500.
On the macroeconomic agenda this Friday, to follow as a priority the PMI barometers for services and industry in the Euro Zone at 10:00 a.m. and consumer prices across the Atlantic at 2:30 p.m. Inflation statistics which come out with a huge delay, due to the workforce mechanically and drastically reduced by the shutdown.
KEY GRAPHIC ELEMENTS
The 8,260 points formally constitute a resistance, which would only become support in the event of a large, rapid crossing in powerful volumes, all in a major sectoral federation. The last session of the week will therefore be essential on a technical level. In the event of high volatility, it could determine most of the shape of the weekly candle.
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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