CAC 40: Light Texas crude below $70

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With the return of Wall Street, it’s the return of… volatility! While the main North American financial markets were closed yesterday Monday due to a public holiday (Labor Day), the first session of the week across the Atlantic (Tuesday) was rather sporty, particularly on the technological side of the stock market. For its part, the CAC 40 lost 0.93% on Monday, to 7,575 points, confirming its failure upon contact with a graphical resistance zone (7,690 points).

The technology sector has been badly hit, as have some of its iconic representatives: XFab (-3.43%), Alten (-4.04%), STMicroelectronics (-4.55%), Ubisoft (-5.02%) and OVH (-10.17%). Note for Ubisoft, the announcement of its exit from the Stoxx Europe 600 index.

The heavy weighting in the CAC 40 index of Total (-3.15%), against a backdrop of sluggish crude prices, also weighed.

On the statistical side, the highly anticipated ISM manufacturing activity barometer did not show any deviation from the consensus, and the scenario of a smooth landing for the American economy is still holding the line. Operators will be able to form a more precise and complete opinion on the issue with the publication on Friday of the NFP (Non Farm Payrolls) report on private employment for the whole of August.

“While this resilience allows the Fed not to rush into its monetary “loosening” cycle, it is starting to be forced to act as the gap between its key rates and inflation becomes significant,” according to Thomas Giudici, head of bond management at Auris Gestion. “The publication of core PCE inflation in July, which came out at 2.6% on an annual basis, confirms, once again, that the inflationary dynamic has weakened quite significantly and is in line, over the last few months, with the 2% objective.”

“As Jerome Powell has often pointed out, the Fed will act (and this is relatively logical given the level of key rates) before inflation returns to its target. The window is therefore wide open to initiate this first reduction at the FOMC meeting in September and the pace for the following ones seems increasingly clear.”

On the other side of the Atlantic, the main stock indices got off to a very bad start to the week, with the Dow Jones contracting by 1.51% on Tuesday and the Nasdaq Composite suffering a heavy decline of 3.26%. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 2.12% to 5,528 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 1,1050$. The barrel of WTI, one of the barometers of risk appetite on financial markets, was trading around 69,60$.

On the agenda this Wednesday, to follow as a priority the final data of the PMI services for the month of August in the Eurozone at 10:00 a.m., as well as the new job offers (JOLTS) in the United States at 4:00 p.m.

KEY GRAPHIC ELEMENTS

The leading French index covered, on Tuesday, half the amplitude of a former lateral channel (range), between 7,465 and 7,690 points, reinforcing the idea that this last level constitutes a graphic resistance. The next test level is mechanically that of 7,465 points.