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At the dawn of a very rich week in terms of company publications, particularly American tech, in monetary terms, the Parisian market managed to maintain levels close to its historic peaks on Monday, in volumes however in free fall. The French flagship index, the CAC 40, gained 0.16% with the essential support of its main weighting, Schneider Electric (+2.01%). The action was driven by Morgan Stanley which upgraded its opinion on the stock to “overweight” from “line weight” previously. The American bank estimates that the French group’s adjusted operating margin will increase in the next two years.
In terms of statistics on Monday, the IFO business climate index in Germany just rose slightly to 88.4, narrowly beating expectations. It is the “expectations for the coming months” component which contributes the most to this encouraging score.
Remember that on Friday, market operators were reassured by consumer prices in the United States, a major publication which was hugely delayed due to staff numbers reduced by the shutdown. Excluding food and energy prices, inflation reached 3% in September when economists surveyed by the Wall Street Journal anticipated a rate of 3.1%.
“The September inflation report confirms that increases in customs duties will have had only a limited effect on inflation in 2025 and in any case very much lower than what had been anticipated,” underlines Bastien Drut of CPR AM. “This report is also very reassuring for the other components of underlying inflation, namely housing and non-housing services, and will therefore allow the Fed (the American Federal Reserve, Editor’s note) to focus on the deterioration of the labor market. The rate cuts in October and December seem certain” he continues.
The market must also deal with the moods of Dr. Trump, who alternates between threats and softening of tone on the commercial front. The impetuous tenant of the White House declared himself optimistic about the signing of a Sino-American trade agreement, the outlines of which have just been negotiated by representatives of the two superpowers.
Furthermore, Brazilian President Luiz Inacio Lula da Silva said on Monday, October 27, that he could see a Brazil-United States trade agreement in the coming days, which could reduce customs duties imposed by Donald Trump against a backdrop of bilateral tensions. “I am convinced that within a few days, we will find a definitive solution between the United States and Brazil, so that life continues to be beautiful and joyful,” Lula told the press in Kuala Lumpur.
On the other side of the Atlantic, the main equity indices rose sharply, such as the Dow Jones (+0.71%) but especially the Nasdaq Composite (+1.86%) in the run-up to the GAFAM quarterly publications. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.23% to 6,875 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 $1.1650.
> The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $61.10.
> THE Treasuries 10 years, yield on federal sovereign bonds maturing in 10 years, were trading slightly above the 3.98%.
> As for the VIX, it was worth 15.79 at the last close of the S&P500.
On the macroeconomic agenda this Tuesday, to follow as a priority the Richmond Fed manufacturing index at 3:00 p.m.
Remember that mainland France having switched to winter time, Wall Street now opens at 2:30 p.m. (Paris time), and not 3:30 p.m., in the meantime, until the American East Coast in turn switches to winter time. Idem, the statistics usually published at 2:30 p.m. are at 1:30 p.m.
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 large sectoral federation. While the S&P500 continues gaps at the peaks, the CAC plateaus below its peaks.
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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