CAC 40: High risk week

(News Bulletin 247) – A high-risk week is opening on the Paris market, a week which will be marked by new figures on American employment, of which we will be able to measure the signs of tension (JOLTS, ADP, unemployment registrations and NFP ), and especially by the FOMC of the Fed, on May 3rd and 4th, Fed which will have to take note of a contraction of the American GDP in the first quarter. According to the very first estimates of the Bureau of Economic AnalysisGDP contracted 1.4% quarter-on-quarter, missing expectations. The appetite for risk, which we have seen that it was not sustainable since March 8, remains conditioned by inflationary tensions, themselves variables dependent on the geopolitical situation between Russia and the West, and on the continuation of measures containment in China…

Geopolitical tensions illustrated by the strikes on Kyiv coinciding with the visit of the UN Secretary General to the Ukrainian capital. Remember that Germany appears to be renouncing its opposition to a total embargo on Russian oil, increasing the likelihood of an agreement along these lines on a European scale.

“The continuation of these restrictions [en Chine] could put more pressure on the already strained supply chain and put even more pressure on global inflationary pressures,” notes Vincent Boy (IG France).

The good content of the results of a majority of companies listed so far remains the only branch to which investors can cling. In Paris, Saint-Gobain managed to garner 1.35% on Friday on the announcement of a 16.4% increase in its turnover in the first quarter … driven up to 14.5% by the effect of price increases. The multi-technical services provider Spie has also confirmed its annual ambitions, after a total growth of 11.2% over the first three months, and the action accelerated by 2.8%. Rather optimistic for the rest of the year after its quarterly turnover, given the level of reservations, Accor advanced by 1.5%. On the other hand, Seb lost 4.7% while the group saw its operating profit decrease at the start of the year, and the symbolic decline (-1%) in Imerys’ activity over the same period led to a decline of 0.6%.

In terms of statistics, operators had to deal with the stability of French GDP in the first quarter, according to the first estimates released by INSEE, below expectations. “These data point to a marked drop in demand in France, in particular household demand, weighed down first by the pandemic and then by inflation and pessimism linked to the war in Ukraine”, analyzes Charlotte de Montpellier, economist at ‘ING France in a macro note.

On the other side of the Atlantic, the main equity indices ended in the red with a marked Beta effect for the technology sector and the factor Growthagainst a backdrop of warming Treasuries 10 years. The Dow Jones lost 2.77% to 32,977 points and the Nasdaq Composite fell sharply, by 4.17% to 12,334 points, breaking a guardrail zone. Finally, the S&P 500, the reference barometer of risk appetite in the eyes of fund managers, lost 3.63% to 4,131 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 $102.70.

To follow in priority, on the agenda this Monday, the final data of the manufacturing PMI in the Euro Zone at 11:00 am, as well as the manufacturing PMI (ISM) in final data for April at 4:00 pm.

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.

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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