CAC 40: Powell (slightly) upsets the permabulls

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The Parisian market was once again cautious on Wednesday, its flagship index, the CAC 40, capping below the zeniths (-0.19% at 8,200 points). Last night the Fed concluded a Monetary Policy Committee meeting. In the fog due to the absence of major macroeconomic benchmarks since the start of the shutdown, the Federal Reserve continued its monetary easing movement by lowering the dollar yield by 25 basis points; it was widely expected. Wall Street was, if not showered, calmed in its ardor after the cautious tone adopted by J Powell who warned the markets: a new reduction in December is far from certain.

For its part, the ECB concludes a meeting of its Board of Governors this Thursday. A status quo on the “rent” of the Euro is widely anticipated by currency traders, who will not fail to pay attention to Christine Lagarde’s comments on the two main economic powers of the Euro Zone:

“Germany is still suffering its industrial crisis and in particular its poor strategic choices in the automobile sector. France is suffering from an endless political crisis which penalizes the morale of economic agents and which slows down growth”, notes Emmanuel Auboyneau, associate manager at Amplegest, who continues:

“The Central Bank has recently shown a reluctance that it had abandoned until its last rate cut. Christine Lagarde undoubtedly believes that the work has largely been done with all the rate cuts for more than a year and that we must now wait to see their diffusion in the economy. She should, however, keep the door open to additional action in the coming months, especially since the American Federal Reserve seems to be heading for a cycle of rate cuts.”

Operators will remain attentive to developments in commercial relations between Washington and Beijing, with “the meeting between Donald Trump and Xi Jinping, the first since the start of the trade war, following the announcement of a preliminary framework agreement this weekend by Scott Bessent. If it seems unlikely that a formal agreement will be signed on Thursday, this meeting at least illustrates the desire of the two leading world powers to avoid a new escalation. Even if, with Donald Trump, everything remains possible”, comments Thomas Giudici, head of bond management at Auris Gestion. The two men met last night, sending significant signals of détente, in South Korea. A deal on rare earths has been announced.

On the values ​​side, Bic suffered (-7.9%) after once again lowering its forecasts for the current financial year. The former Orpea Emeis jumped 9.3% after publishing an increase in its occupancy rates in the third quarter. The volatile satellite communications sector has taken the top positions in compartment A of the rating, like SESG (+5.06%) and Eutelsat (+8.86%).

On the other side of the Atlantic, the main equity indices ended Wednesday’s session in mixed order, with the Dow Jones losing 0.16% and the Nasdaq Composite gaining 0.55%. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, played a balancing role at 6,890 points.

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 7940.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart