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CAC 40 Downward Correction Ahead of the ECB Meeting

12/8/2022 2:21 PM

The French CAC 40 stock index continues its local downward correction around 6646.0 ahead of the European Central Bank (ECB) meeting on December 15.

A statement by the ECB chief economist Philip Lane on the need to continue tightening monetary stimulus confirmed investors' forecast that the lending rate could be raised by another 50 basis points in December, to 2.0%, as inflationary pressure on the economy increases and may accelerate in early 2023, but then, against the backdrop of decisive steps taken by the financial authorities, it may well slow down to 6.0-7.0%.

A barrier to the more rapid downward dynamics of CAC 40 quotes is neutrality in the bond market: the leading 10-year French debt securities are traded at a rate of 2.228%, which is practically the same as last week at 2.266%; conservative 20-year bonds show a slight decrease, losing 1.02% compared to yesterday's close, while global 30-year ones lost 0.87%.

The growth leaders in the index are Sanofi SA (+6.10%), Teleperformance SE (+3.01%), Legrand SA (+0.43%).

Among the leaders of the decline are Kering SA (-4.15%), Alstom SA (-3.13%), Thales Group SA (-2.27%), Airbus Group SE (-2.20%).

On the daily chart of the asset, the quotes are traded within the global Expanding Formation pattern and after reaching the resistance line at around 6800.0, they are reversing to the downside.

Technical indicators are holding a buy signal, which started to weaken: fast EMAs on the Alligator indicator began to actively approach the signal line, and the AO oscillator histogram, being in the buy zone, forms bars with a downward trend.

Support levels: 6550.0, 6340.0. | Resistance levels: 6810.0, 7020.0.

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