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In the absence of any benchmark from Wall Street, the Paris market experienced a lackluster start to the year on Monday, with the CAC 40 index gaining 0.20% while remaining below a resistance zone of 7,690 points. The market took note, via the final data from the industrial PMIs in the Eurozone, of the now chronic weakness of German industry, the strong point of the leading economic power in the monetary union.
“Germany is today the black spot of the European continent due to its very industrial positioning,” notes Emmanuel Auboyneau, AMPLEGEST Associate Manager.
“The rebound in tourism is benefiting countries like France, Spain and Italy more. European inflation has remained moderate throughout the summer and is now approaching the European Central Bank’s target. The recent wage moderation is reassuring in this respect. Everything therefore indicates that the European monetary institution will continue its rate cut cycle that began in July.”
There is the same confidence in the trajectory of lower rates across the Atlantic, even if “the Fed is the last central bank in developed countries (excluding Japan, of course) to have still not started its cycle of lowering key rates, while inflation has largely declined since its highs in 2022”, as noted by Thomas Giudici, head of bond management at Auris Gestion.
“Unlike other areas, the strength of the US economy partly explains this caution in acting by FOMC members. This strength was once again confirmed last week by the upward revision of GDP and consumption data for the second quarter as well as by the above-expectations figures for US household income and spending for the month of July.”
The big support factor for the CAC 40 came from Sanofi, the pharmaceutical group remaining one of the largest capitalizations within the index. The stock closed up 3.6%, driven by encouraging clinical data for the company’s potential treatment for certain forms of multiple sclerosis. Enough to offset the poor daily performance of the luxury sector, penalized by a disappointing activity barometer in the private sector in China.
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 1,1050$. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around 73,60$.
On the agenda this Tuesday, to follow in priority the manufacturing PMI (ISM) in the United States, expected to rise slightly, although below 50, to 47.5.
KEY GRAPHIC ELEMENTS
On August 19, the leading French index re-entered its sideways channel between 7,465 and 7,690 points. Since then, it has traced its entire amplitude, before reaching a legitimate oversold zone, below a resistance level. A rebalancing of the forces present is underway in the short term.
PREVISION
Considering the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
It should be noted that a crossing of 7690.00 points would revive buying tension. While a break of 7465.00 points would revive selling pressure.
Hourly data chart
Graph made from software Prorealtime
Daily Data Chart
Graph made from software Prorealtime
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