Stock market: CAC 40, BNP Paribas, Crédit Agricole, Tesla, Bouygues, Carrefour… on the Momentum program this week

CAC 40, Nasdaq, Dow Jones… The stock market remained under pressure this week, inflation and the tightening of the monetary policies of the Fed and the ECB, the flash crash on the pound Sterling as well as Vladimir Putin’s provocations on the Front of the war in Ukraine (thwarted gas deliveries, territorial annexations…) continuing to fuel the fears of equity investors. The only favorable wind is the downward correction observed on the soaring movement of long-term rates (but beware, the underlying trend remains bullish). The stock market continued to lose ground this week “as the economic and geopolitical uncertainties remain significant”, while the central banks “have no choice but to raise their key rates quickly in order to prevent inflation from settles permanently”, notes Federal Finance Gestion.

“Despite certain signs of disinflation (energy, food), the service sector continues to drive prices up sharply and the labor market remains tight,” notes Schelcher Prince Gestion, for whom “this is the main point of pressure on the markets”. The Fed having increased its hawkish bias (in favor of a more restrictive monetary policy and therefore higher key rates), the pause in the normalization of monetary policy (so awaited by the markets this summer), “is postponed until later. late while waiting for convincing signs of a slowdown in the rise in prices and wages”, underlines the asset manager.

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The euro zone will have to continue to face high inflation

The services sector, currently the main source of inflation, is slow to follow the cyclical normalization of goods prices. “It is the source of all the concerns of households who are increasing their wage claims to (cope with) this rise in the cost of living”, notes Schelcher Prince Gestion, for whom a favorable shift in the monetary policy of central banks can only be envisaged “if the inflation figures decline in a lasting and significant way, or if the financial conditions deteriorate too much”.

While Europe is confronted with “strong exogenous inflation” and prospects of recession “larger than in the United States”, the ECB finds itself forced to accelerate its monetary normalization, while “maintaining the size of its balance sheet to avoid any excessive recessionary shock”, indicates Schelcher Prince Gestion. Especially since the relative weakness of the euro (which automatically increases the cost of imported goods) maintains inflation in the euro zone. The asset manager warns that long-term inflation levels will be “probably higher” in the future, while many issues (energy independence, demography, de-globalization, or the environment, etc.) will influence permanently on prices.

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The Fed and the ECB “straight in their boots”

While central banks have been “very clear that they want to tighten financial conditions (raise interest rates and lower asset prices) in order to slow the economy and thus regain control of inflation”, this inevitably makes the markets feverish, “especially at a time when the economy is already slowing down and when the political and geopolitical risks are high”, underlines for its part La Banque Postale Asset Management (LBPAM).

Even after the sharp rise in tensions on the equity, interest rate and foreign exchange markets in September, “the vast majority of members of the Fed, the ECB and the BoE (Bank of England, editor’s note) continue to want to raise their rates quickly, at the risk of a marked recession”, notes the asset manager, who says he is maintaining great caution on equities and other risky assets.

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The eurozone is slipping into recession

On the data front, the broad-based decline in European Commission confidence indicators in September suggests the Eurozone is “sinking into recession heading into the fourth quarter, which is consistent with our scenario of a mild recession this winter”, notes LBPAM, which adds that confidence “is particularly low for consumers and core countries, which are more exposed to the energy shock”. And in China, the recovery in activity is weak… A bad omen for the trajectory of the global economy.

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Momentum was able to thwart the pitfalls of the Stock Exchange and warn its subscribers in time

Momentum, Capital’s dedicated daily premium investment letter and newsletter, which helps its subscribers identify entry (buy) and exit (sell) points on equities, delivered its expectations (bullish and bearish) to good wisely, by accurately forecasting the probable trajectory of the CAC 40 and by warning its readers in time of the imminent fall of several major stocks. On the satisfaction side, we thus issued a message of caution and a bearish anticipation just before the violent drop in the prices of flagship shares such as Tesla, BNP Paribas, Crédit Agricole, or Apple.

We have analyzed the outlook for the CAC 40 and Wall Street (S&P 500), the shares of the major French banks (see above), Schneider Electric, Bouygues, Kering, Carrefour, Dassault Systèmes… And even those of the ‘ether (Ethereum), for cryptocurrency enthusiasts.

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Author’s declaration of interests

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