The Paris Stock Exchange (and possibly Wall Street this evening) ended a very difficult week, with a drop of almost 6% in the CAC 40 in just 4 sessions, driven by the European Central Bank’s offensive against inflation and the increase in consumer prices in the US. The US is larger than expected, which portends a restrictive policy by the Federal Reserve. Across the Atlantic, “Don’t count on a compromise from Jerome Powell,” the Fed appears determined to “raise its rates in the coming months, and that’s pretty much whatever happens,” judging German asset management giant DWS.
As for the European Central Bank, it appears to have embarked on a long crusade in the face of inflation, with a whole series of major interest rate hikes. This is enough to stoke fears of fragmentation within the eurozone, which are the most fragile countries that suffer from higher long-term prices. That Italy (3.80% at the time of writing, versus less than 1% a year ago) is already approaching the psychological limit of 4%. Ultimately, government bond prices are rising on both sides of the Atlantic, with the potential for turmoil as a result.
The specter of inflation accompanied by economic stagnation
On the growth front, budget support from countries “remains a key element in order to contain recession risks, particularly in Europe, even if the situation continues to deteriorate gradually,” said Judge Alan Jelenok, chair of the Federal Finance Executive Board. The administration, which faces the risk of stagflation (a prolonged period of low growth and high inflation) is on the table, due to the multiplication of shocks (the war in Ukraine, Chinese containment, tightening monetary policies of the Fed and the European Central Bank). Especially since major institutions, such as the International Monetary Fund and the World Bank, recently lowered their forecasts for global economic growth for 2022.
Momentum withdraws from the game
In the context of this turbulent stock market, Momentum, the capital market and cryptocurrency newsletter, has once again managed to hold it, benefiting from its selective and cautious approach. Our expectations for the CAC 40 in particular have come true, as the bearish acceleration on Friday was correctly predicted, after breaking a major support.
On the equity front, we delivered our forecasts for CAC 40, BNP Paribas, Saint-Gobain, Orange, GL Events, Abeo, Airbus, Figeac Aero, Euroapi (recently released from the lap of Sanofi), Prodways, Thales… with expectations up. or down.
On the cryptocurrency front, we offered our opinion on the future trajectory of Bitcoin, while Laurent Albee, Director of Next Momentum, gave his predictions for ada (Cardano).
In general, our pick again outperformed the stock market, outperforming the CAC 40 in general, such as Thales, Abeo, Sanofi, Figeac Aero and even from Prodways, which brought a lot (and in a short time) to our readers, which is our number one goal (put less Slightly above the highest point of the week) was reached. BNP Paribas and Saint-Gobain develop in line with our expectations.
On the contrary, Airbus’ trajectory has been disappointing, the aircraft manufacturer has revealed rather weak monthly activity figures (only 13 new orders for commercial aircraft in May, against 47 deliveries), while concerns are related to SCAF. Also heavier on trend.
In addition, Atos, which started the week with fanfare and is still buoyed by acquisition and restructuring hopes, has turned the tide in recent days, with press rumors reporting a rift between the new CEO and chairman over which strategy to pursue. Our protective stop (automatic sell order at stimulus level) that we proposed below €23.70 proved to be wise, as it allowed subscribers to cut their losses fairly quickly and thus avoid a downward acceleration from Thursday to Friday.
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Declaration of the author’s interests