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CAC 40 Investors Fear Faster Interest Rate Hikes

3/16/2023 1:47 PM

One of the leading indexes of the European economy, CAC 40, is correcting, trading at the level of 7000.0.

The French stock market is actively declining after yesterday's release of inflation data: in February, the Consumer Price Index in France added 1.1%, acting as a catalyst for the growth of the annual value to 6.3% from 6.0% earlier, while the Harmonized with EU standards CPI rose by 7.3% from 7.0%. Negative dynamics signals that the measures taken by the European Central Bank (ECB) are not enough to stabilize the situation in the economy, and this may cause a more rapid increase in interest rates in the EU, which, as a rule, has an extremely negative impact on the positions of stock assets.

Meanwhile, the French bond market continues its period of high rates across the entire line of debt assets: the yield of 10-year bonds is held in the region of 2.724%, adding 1.77%, while 20-year bonds are trading at a rate of 3.073%, up by 0.77%. In turn, 2-year bonds have risen by 3.300% since the start of trading.

The growth leaders in the index are Sanofi SA (+0.89%), Orange SA (+0.60%), Teleperformance SE (+0.02%).

Among the leaders of the decline are Societe Generale SA (-12.18%), Alstom SA (-10.45%), BNP Paribas SA (-10.11%), Renault SA (-5.86%).

On the daily chart, the index quotes are traded within the local ascending corridor, approaching the support line at 6800.0.

Technical indicators reversed and issued a sell signal: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO histogram, being in the sell zone, continues to form descending bars.

Support levels: 6950.0, 6720.0. | Resistance levels: 7080.0, 7390.0.

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