The CAC 40 index has made a swift recovery this month as investors rotate back to European stocks after some encouraging economic numbers. It rebounded to a high of €7,987, its highest level since June 7, and up by 13.5% from its lowest level in August last year. So, what next for the blue-chip index ahead of the ECB rates decision?
ECB interest rate decision ahead
The CAC 40 index has rebounded this year after some important economic data from the country. A recent report showed that the country’s manufacturing index rose from 41.9 in December to 45.3 in January. While the figure remains below the expansion zone of 50, it is a sign that it is moving in the right direction.
Other European countries like Spain, Italy, and Germany have started to publish encouraging macro data. That is an important thing for the CAC 40 index because many constituent companies do a lot of business across the continent.
The next key catalyst for the CAC 40 index will be the upcoming European Central Bank (ECB) decision. There are odds that the bank will cut interest rates by 0.25%, bringing the cumulative cuts to 1%.
The CAC 40 index will also react to the upcoming Federal Reserve interest rate decision. Economists believe that the bank will maintain interest rates unchanged as it observes the trends on the economy. European stock indices usually react to these events from the United States where many French companies do a lot of business.
Corporate earnings ahead
The CAC 40 index will also react to the ongoing earnings season. Big technology companies like Microsoft, Amazon, Meta Platforms, and Apple will publish their financial results this week.
These numbers will come at a time when there are jitters about technology valuations following DeepSeek’s success. Most tech stocks, including NVIDIA and Broadcom, plummeted on Monday after the Chinese company went viral.
Many French companies will start releasing their earnings this week too. LVMH, the biggest company in the region, will publish its numbers on Tuesday. These results will come after Bloomberg published a report on the troubles at Tiffany, the iconic firm it bought in 2020.
LVMH’s numbers often have a big impact on the CAC 40 index because of its weighting as the biggest firm in France. Christian Dior will also release its earnings on Tuesday.
The other notable companies to publish their numbers this week are Remy Cointreau, Sanofi, and STMicroelectronics.
More CAC 40 index companies will release their results next week too. Some of the most notable ones are firms like BNP Paribas, Dassault Systemes, Amundi, TotalEnergies, Credi Agricole, L’Oreal, Vinci, and Societe Generale.
The best-performing CAC 40 index stocks this year are big names like LVMH, Societe Generale, Kering, and Hermes.
CAC 40 index forecast
CAC 40 index chart by TradingView
The daily chart shows that the CAC 40 index has bounced back in the past few weeks. It recently crossed the important resistance level at €7,810, its highest level in September last year and the neckline of the double-bottom pattern.
The index is now about to form a bullish crossover pattern, where the 50-day and 200-day moving averages cross each other. Therefore, the path of the least resistance for the CAC 40 index is bullish, with the next point to watch being af €8,257, its 2024 high.
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