- The latest minutes of the meeting confirm that the Fed has begun to consider reducing asset purchases
- CAC 40 take the drum after an impressive performance in recent weeks
- DAX 30 pulls away from 16,000 as he fights below his rising trend line
Global equities are fell this Thursday morning as the Federal Reserve confirmed in yesterday ‘s minutes that it was considering removing some of the financial stimulus to the economy. This statement is not surprising, as the markets have been talking about austerity for several months now, but it seems that the official confirmation of the central bank brought some nerves to investors.
Then you can only imagine what might happen next week when the Fed meets at the annual Jackson Hole Symposium to discuss the whole thin monetary policy – the date most economists predict that the Fed will actually announce a reduction in incentives later in the year. , which has sparked a public debate on expectations of when the central bank will actually narrow in either September or December.
Ultimately, the austerity doesn’t really end, it just takes a foot off the accelerator, and economic data has shown that the U.S. economy is improving significantly and inflation is at its highest since 1992, the economic landscape seems to be a little overcrowded. Equities have been on a strong path over the last few months “the only way is up”, so I would be surprised if this sale would gather steam from an expired Fed meeting. There are likely to be some more increases, at least until the real stimulus is removed at the end of the year.
CAC 40 HIGH FROM HIGH
The French index has been one of the hardest hits this morning, falling more than 2.8% at the time of writing. This is due to a sharp surge of a few days, canceling 12 days of steady growth in just 4 sessions. The CAC 40 has outperformed in recent weeks as the index has been on a strong uptrend, reaching an all-time high of 6,495 in 2000, but unfortunately it is only ashamed by 30 points.
I expect the momentum to pick up in the near future so that the CAC can exceed its all-time high, but today’s sales will make it difficult to find strong support. I would expect new buyers to be lured to a lower level, but some stops may have started in the process, especially since it exceeded some round numbers that tend to act as a psychological level for stops and boundaries. Now that the 6800 has been cleaned, the next level to watch is the 6500, where we have seen support in the past.
CAC 40 daily card
DAX 30 was rejected at 16,000
The other big loser in Europe this morning is the DAX 30, which had also run pretty well lately. The upward trend in the DAX has not been as smooth as in the CAC, but the German index successfully outperformed its European peers at the beginning of its recovery from the pandemic lows of May / June last year. This means that in the last month, DAX has traded below the lowest upward trend in January, which showed a slight decline in the index. The 16,000 level has proved difficult to break, so we can see the index pull back towards its 127.2% expansion level (15,424), which has been key for the last three months before it can advance a new attempt to break 16,000.
DAX 30 daily schedule
– Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin