CAC 40: It’s nervous, very nervous

(News Bulletin 247) – After a floating first part of the session, the CAC 40 resumed its downward path, led by Wall Street which, the day after a significant rebound, retraced its gains, against a backdrop of great nervousness after the meeting of the Fed’s Monetary Policy Committee. In the end, the flagship Parisian index (-0.43% to 6,368 points) traced a red candle with a very elongated body, almost without a wick, in a bearish engulfing structure, in the immediate vicinity of a technical safeguard. ..

Operators struggled to unite after the Fed’s expected decision to raise its key rates by 50 bps, while announcing the start of the gradual reduction of its balance sheet. If future rate hikes of an equivalent magnitude are on the table, J. Powell made it clear that increases of a greater magnitude (75 bps) were not “actively considered” by the members of the Board. A less aggressive tone than the market had feared since the beginning of the week, and which allowed – only for a time – an easing movement on government bond yields.

In terms of statistics, operators took note of a contraction of 0.5% in French industrial production in March, on a monthly basis, missing expectations. In addition, new registrations for unemployment benefits, across the Atlantic, amounted to 200,000 new units over the past week.

Side values, Airbus gained 6.28% to 109.02 euros after tripling its profit in the first quarter. The aircraft manufacturer maintains its outlook for 2022 and will increase the monthly production rate of its A320 range by 2025. Legrand limited its gains to 1.51% at 83.20 euros in the wake of dynamic sales in the first quarter of 2022. The group announced a turnover growth of 17.8% compared to the same period of 2021, to 1.97 billion euros. After rising, ArcelorMittal finally yields nearly 2% despite the announcement of a jump in its results in the first quarter of its 2022 financial year, thanks to a rise in steel prices and despite the impact of the war in Ukraine on volumes. Red lantern of the CAC, Crédit Agricole loose more than 4%, due to the sharp drop in quarterly profits, weighed down by large provisions related to its exposure to Russia and Ukraine. Unlike Societe Generale (+ 1.5%) which saw its quarterly profits increase by more than 20% to 1.57 billion euros for the first quarter of 2022, despite its presence in Russia.

On the other side of the Atlantic, the main equity indices fell very heavily on Thursday, like the Dow Jones (-3.12% to 32,997 points) or the Nasdaq Composite (-4.99% to 12,317 dots). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, lost 3.56% to 4,146 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 $108.70.

To follow in priority, on the agenda this Friday, the monthly federal report on American employment, NFP report for No Farm Payrolls. Operators will watch for signs of tension in the job market, one of the essential working bases for the Fed in the construction of its monetary policy for the months to come.

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, was again broken yesterday, on a combination of bearish engulfing candles.

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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