The Parisian index initially fell on Thursday but continues to find support at the 200-day EMA.
CAC 40
The Parisian index initially broke below the 200-day EMA during the trading session, but just as we had seen during the Wednesday session, buyers came in to defend that level. It's very interesting that market participants are trying to defend this level so drastically.
Ultimately, this is the 4th consecutive session that we've seen some selling pressure. But really, I think when you look at this level, it does make sense that traders would be watching it closely. It's basically a support level from July, and of course that 200-day EMA comes into the picture as well.
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Luxury Sector Pressures and Economic Headwinds
Now, the big drag right now in Paris is the luxury sector, such as Hermès, LVMH, L'Oréal, etc. Basically, they're starting to complain, in their own way, that the stimulus in China not increasing demand. The sector really hasn't recovered from the Iran conflict disruption.
LVMH is down about 14% year-on-year, Hermès down a whopping 27%. This is a major constraint on the CAC at the moment.
Financials and defensives have done fairly well, though. BNP Paribas and AXA are both up. The stock Legrand is up on a Deutsche Bank upgrade from buy, from the hold, and at this point, it looks like this is a market where traders are trying to find the bottom.
I'd be a bit hesitant to jump in, but it is worth watching rates around the world. They are rising. That doesn't help, as there's pricing in of another ECB rate hike.
Ultimately, the composite PMI in France came in at 48.5 for August, down from 49.4, with services contracting harder than manufacturing. This is a private sector downturn deepening as we go along. French CPI is 2.4% in August, rising from 2.1%. Unemployment is now at 8.3%, so there is a bit of a mix here in France.
Ultimately, though, technical traders may be looking at this as a potential opportunity.
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