(News Bulletin 247) – Once again, while Wall Street is flying from record to record, the CAC 40 has plateaued below its recent zeniths, weighed down by BNP Paribas (-3.54%), whose quarterly copy did not convince. Conversely, the volatile automotive equipment sector was particularly well oriented, with Valeo (+3.61%), Forvia (+4.30%) and OPMobility (+5.40%). The sector was surrounded by several price target hikes from Jefferies.
To be complete on the values side, Clariane fell by 12.8% after warning that its profitability would grow less quickly than expected in 2025. Clariane, however, maintains its annual turnover forecast. Edenred and Pluxee took 3.2% and 2.8% respectively while the deputies, in committee, removed an employer contribution of 8% on restaurant vouchers from the Social Security financing bill. Which suggests that the same thing will happen when reading the text.
The week will take on a monetary color from this Wednesday, with a major meeting, the outcome of an FOMC. Guy Stear, Head of Developed Markets Strategy at the Amundi Investment Institute predicts that “the American Federal Reserve will make rate cuts in October, in December, then twice more during the second quarter of 2026.”
“But the market also anticipates it, and the more interesting question is whether the Fed press conference will support the very aggressive cuts embedded in the curve through early 2027. Another point that is now just as important: the way in which the Fed plans to respond to the drop in liquidity in the short term, given the significant sovereign debt issues in recent months. If the US Federal Reserve fails to meet very aggressive market expectations for rate cuts, we could see a modest rise in 2-year Treasury yields, but they could also be sustained, if the Fed begins to increase liquidity in the system.”
The stakes, therefore, even if a reduction of 25 basis points in the main key rate is almost certain. The CME Group’s FedWatch tool calculates the occurrence of this scenario with almost 97% probability.
The next day, it will be the turn of the ECB to complete its Board of Governors, the equivalent of the FOMC. “The ECB Governing Council will most likely decide to keep rates unchanged at its meeting on Thursday,” says Felix Feather, economist for Aberdeen.
“With the decision on rates almost certain, attention will focus on how it is presented, including any clues about the future path of monetary policy.”
“Market pricing suggests that the ECB will stay around 2% for quite some time, and we share this view. Christine Lagarde will likely describe monetary policy as “well positioned”, to suggest that the Council sees no urgency to change the current framework. She will probably also have to answer some tricky questions about the ECB’s balance sheet policy, given that the US Federal Reserve (Fed) is expected to announce the end of its quantitative tightening (QT) on Wednesday,” continued the economist.
The market is awaiting a series of major meetings, with the results of large American technology groups, commonly known as Gafam, on Wednesday and Thursday, and the meeting between Chinese and American presidents, Xi Jinping and Donald Trump, on Thursday.
“Investors’ expectations for a constructive outcome of the meeting scheduled for Thursday between President Trump and President Xi were reinforced by Donald Trump’s statements to journalists: ‘I have a lot of respect for Xi. I think we will reach an agreement’. He also suggested that a resolution regarding TikTok could be found during their discussions,” observes Deutsche Bank.
On the other side of the Atlantic, the main equity indices once again finished in the green like the Dow Jones (+0.34%) and the Nasdaq Composite (+0.80%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.23% to 6,890 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 Wednesday, follow the Fed press conference at 7:30 p.m. as a priority.
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. As a result, mechanically, the RSI index has already started its inflection.
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 8000.00 points would restart the selling pressure.
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