CAC40: the end of the session valid support breakout after FED

( – The end of the session looks bad in Europe as the CAC40 (-1.8% to 5,922) confirms the break of the support at 5,980… and only a miracle would make it possible to rebound towards 6,000 ( like the day before at the end of the session, with the unexpected rescue of the support of ‘6,000’).

Downside alert also for the Euro-Stoxx50, also in a bad position (-1.5% to 3.440) in the wake of the DAX with -1.6%.

Wall Street reopened in a modest decline (-0.3%) before accelerating downward: if the Dow Jones resists (and remains above 30,000Pts), the S&P500 drops -1% and the Nasdaq (- 1.2% at 11,100, after -1.8% the day before, i.e. -3% in 48 hours): important supports are threatened… but a lot can still happen before 10 p.m. (but too late for the Europe, the damage is done).
The atmosphere is currently clearly weighed down on Wall Street by the fall in the Conference Board’s index of leading indicators, which confirms the scenario of a marked slowdown in growth in the United States.

This so-called precursor index fell 0.3% to 116.2 last month, after having already fallen 0.5% in July, while analysts expected a more limited decline of 0.2%.

The index is now down 2.7% over the last six months (from February to August), which more than offsets the 1.7% gain that had been recorded over the previous six months.

“The fact that the index of leading indicators falls for the sixth month in a row is a potential harbinger of a recession,” warned Ataman Ozyildirim, director of economic research at the Conference Board.

Recession, the US Federal Reserve considers it a necessary evil (‘there are no painless measures to curb inflation’): it announced last night that it had again raised the target for its key rates by 75 points basis, now raised to 3-3.25%, and said to foresee additional increases in the coming months, probably +75Pts in early November (and at least +50) and +50 in mid-December.

Its projections now show interest rates around 4.5% in 2023, a much more restrictive posture than the markets expected.

Across the Channel, the BoE raised its key rate by +50 base pts to 2.25%, a decision that came as no surprise (7th tightening this year).

Bond yields are affected with ‘Gilts’ which tend by +20Pts to 3.510%, a ’10 years’ US which displays +19Pts to 3.70% and a Bund to +9Pts to 1.98%.
Our OATs take +10Pts to 2.545%, new annual and 9-year record (September 2013)… and this is of course the case for all the other instruments mentioned above.

At the press conference following the Fed’s announcements, Jerome Powell, its chairman, assured that rate hikes would follow one another until growth had calmed down and labor market tensions had not subsided. not appeased.

‘With the Fed continuing to attempt to rein in inflation at record highs, investors are likely to continue to dump stocks amid fears that its aggressive monetary policy will go too far and push the economy into a tailspin. recession’, warns Srijan Katyal, head of strategy at ADSS, a broker based in Dubai.

‘This element is aggravated by the deterioration of the geopolitical situation after Putin’s announcement of a partial military mobilization of his country’, he adds.

For its part, the Bank of Japan (BoJ) maintained its ultra-accommodative monetary policy overnight, which continues to contrast with the tightening initiated by the other major global central banks… but it intervened massively to stop the fall. of the Yen which reached -20% against the $ this year (it recovered +1.5% against the $ and up to +1.6% against the Euro.

At the same time, the dollar is still gaining ground against the euro, which is now approaching the 0.98 threshold (the euro fell to 0.9815 after a new record low at 0.9810), traders n obviously not anticipating such an offensive statement from the Fed.

On the side of the oil compartment, the barrel of Brent (+0.25%) is still vegetating in the area of ​​90.3 dollars after the announcement yesterday of a new increase in crude stocks in the United States.

Among the statistics of the day, registrations for unemployment benefits increased by +5,000 during the week of September 12 in the United States, these amounting to 213,000, against 208,000 (revised figure) the previous week, according to Department of Labor figures.

The four-week moving average – which can be considered a better indicator of the underlying trend in the job market – is down, at 216,750 against 222,750 (revised figure) a week earlier.

Finally, the number of people regularly receiving benefits rose to 1,379,000 during the week of September 5 according to the most recent figures available, which represents a drop of 22,000 compared to the revised figure for the previous week. .

It remains to take note of the leading indicator of the Conference Board in the afternoon.

On the securities side, Saint-Gobain has obtained authorization from the competent competition authorities for the acquisition of GCP Applied Technologies, the world leader in construction chemicals. The transaction will close on September 27, 2022. GCP Applied Technologies achieved approximately $1.0 billion in revenue in 2021 by 1,800 employees operating at 50 manufacturing sites in 38 countries.

Suez has agreed to acquire 100% of the share capital of Suez Recycling and Recovery UK Group for an amount of 2 billion pounds sterling. The cash proceeds of the transaction represent an attractive valuation of 16.9 times normalized 2021 EBITDA. will bring Veolia’s indebtedness well below 3x.

Franprix, a subsidiary of the Casino group, and the Zouari family have decided to extend their historic and strategic partnership. This collaboration is intended to contribute to the dynamism of the brand’s development policy with the creation of new synergies and a common objective of 75 store openings.

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