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The Fed somewhat cooled the bullish enthusiasm of Wall Street, and in turn, the CAC 40, already sluggish under resistance since October 20, fell by 0.53% to 8,157 points. A slew of generally disappointing quarterly results also fueled this return of risk aversion… in the very short term only, since let’s remember that the flagship French index very recently set new historic records.
The Fed concluded a meeting of its Monetary Policy Committee (FOMC) on Wednesday, resulting in a further reduction of 25 basis points in its main key rate, the “rent” of the Dollar.
“Caution dominates for the immediate continuation of monetary policy” however warned Ivo Mertens iBanFirst and professor at the University of Rotterdam.
“The market is still counting on a new rate cut of 25 basis points at the beginning of December. This is also our opinion. On the other hand, the trajectory of rates in 2026 is uncertain. inflation is expected to fall below 3% next year once these effects dissipate.”
As for the ECB, it concluded a meeting of its Board of Governors on Thursday, resulting in a widely expected status quo on rates. “Like the meeting last September, the ECB underlined the resilience capacity of the Euro Zone economy allowing it to face an environment that is still uncertain both in terms of international trade and geopolitical tensions,” commented Alexandre Perricard, President of Uzès Gestion
“At this stage, the ECB confirms the good positioning of its monetary policy with regard to the economic environment and the risks present […] Invariably, the central bank reiterates that it does not follow any predefined rate path and its future monetary policy decisions will depend on the evolution of the data and their impact on the inflation outlook.
In terms of corporate results, the trend is dark red. Stellantis (-6.5%), Schneider Electric (-4.5%), Société Générale (-4.1%), Crédit Agricole SA (-3.4%), Totalenergies (-3.1%) and, excluding CAC 40, Rémy Cointreau (-7.5%), are all sanctioned after their publication. Against the total trend, Airbus gained 3% and by far the largest increase in the CAC 40.
On the other side of the Atlantic, the main equity indices lost ground, such as the Dow Jones (-0.23%) but especially the Nasdaq Composite (-1.57%). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.99% to 6,822 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 $60.20.
> THE Treasuries 10 years, yield on federal sovereign bonds maturing in 10 years, were trading slightly above the 4.11%.
> As for the VIX, it was worth 16.90 at the last close of the S&P500.
On the macroeconomic agenda this Friday, priority should be given to the first estimates of consumer prices in the Euro Zone for the month of October.
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 major 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 mentioned, our opinion is negative on the CAC 40 index in the short term.
This bearish scenario is valid as long as the CAC 40 index is below resistance at 8260.00 points.
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