(News Bulletin 247) – The backdrop is marked by a lot of nervousness on the financial markets, which must continue to deal with an equation of great complexity, with 4 factors that influence each other: the very clear strengthening of monetary policies, the rising prices that are setting in, the logistical problems of the supply chain and the war in Ukraine.. . Yesterday the CAC 40 index traced a candle similar to a doji whose by definition ultra-thin body is positioned just above a technical guardrail at 6,380 points.
Operators will analyze this evening (after market) the outcome of a new Fed Monetary Policy Committee, which should result in a 50 bp increase in Fed Funds. The question that remains, and which will focus the attention of investors at a press conference, is that of a possible “easing”, with the necessary quotation marks, of the forecast trajectory of rate hikes, following the publication of the unprepossessing first estimates of US growth for the first three months of the year… coming months”, for Vincent Boy (IG France), who relies on the disappointment aroused by the figures of the American GDP in Q1.
“If the publication, prima facie, at -0.4% in quarterly variation of the American growth (-1.4% in annualized against +1% expected) marks a clear slowdown compared to the last quarter (+6.9% in annualized), the reading in more detail of the components shows a more resilient image of the American economy”, nevertheless qualifies Thomas GIUDICI, Co-head of bond management at AURIS Gestion. “Indeed, GDP was mainly impacted by a booming trade deficit (-3.2 pts), aimed at rebuilding stocks of consumer goods, as well as by reducing public spending. At the same time, consumption continues to hold up well, with, for example, a further increase in consumer spending in April (+1.1% against +0.6% expected and +0.6% the previous month), despite the high inflation on almost all goods.”
In terms of statistics yesterday, the unemployment rate in the Euro Zone contracted to 6.8% of the active population, in line with expectations. Across the Atlantic, new job offers (JOLTS) emerged for March beyond expectations, at 11.55 million units, excluding the agricultural sector. Recall that Friday will be published the federal report on employment for the month of April. The opportunity to measure more precisely the degrees of tension in the job market.
On the stock side, the rebound yesterday mainly benefited undervalued cyclical stocks such as Alstom (+5.43% to 22.15 euros) and Renault (+3.83% to 24.15 euros) and commodity producers including ArcelorMittal (+4.24% to 28.12 euros) and TotalEnergies (+3.87% to 48.80 euros). Jumping 5.15%, BNP Paribas climbed to the second highest step of the CAC 40 podium, the bank having reported an increase of nearly 20% in its net profit in the first quarter, more than 50% in beyond expectations, and confirmed its 2025 objectives despite the economic fallout from the conflict between Ukraine and Russia.
On the other side of the Atlantic, the main equity indices symbolically gained a few points on Tuesday, in timid volumes pending the Fed’s verdict. The Dow Jones ended the session +0.20% at 33,128 points, and the Nasdaq Composite 0.22% at 12,563 points. The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.48% to 4,175 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0520. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $103.60.
To follow as a priority, on the agenda this Tuesday, the services PMI in final data for the Euro Zone at 10:00 a.m., the results of the ADP firm’s survey on American employment at 2:15 p.m., the Fed’s monetary policy decision at 8:00 p.m. and the traditional press conference at 8:30 p.m.
KEY GRAPHIC ELEMENTS
In just two sessions, the flagship Parisian index cleared up two remaining gaps, one bullish, from March 16, the other bearish, from April 25, again activating the scenario of a sideways drift around 6,500 points. . The volumes are placed under surveillance, especially on any rapid navigation from one terminal to another or on breaks, if any, of one or other of these terminals. The lower limit, around 6,380 points, is particularly threatened.
The decrease in successive high points is now very clear: 05/01, 10/02, 29/03, 21/04, 29/04.
FORECAST
In view of the key graphic 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 trading below the resistance at 6760.00 points.
Hourly data chart
Chart in daily data
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