CAC Continues to Tumble Day After Stellantis Cuts Forecasts

Stellantis (STLAP.PA) reduced its earnings forecast and increased the outlook on cash-burn.

The automaker maker lost 14% yesterday and is stable today on the European open. The company cited higher costs to revamp the U.S. business unit, competition form China on EVs, and worsening industry trends.

The bad news from one of Europe’s largest automakers coincides with deteriorating sentiment on the French political scene. The newly appointed prime minister, Michel Barnier, has no outright majority.

At the same time, conjuring a majority will probably involve a juggling act on each legislative proposal. Making an effective government seem highly unlikely due to the stark differences of other major parties in the national assembly.

Later on today at 3 pm CET, Barnier will be giving his first government policy statement to the national assembly.

The left-wing alliance National Popular Front has vowed to vote him out after they landed the most seats in the assembly. Yet they were denied the appointment of prime minister from their files.

The CAC is down 0.43% on the day, while the DAX is almost unchanged down 0.02% on the day.

Technical View

The chart above for the CAC shows a market that is still undergoing a bear trend. Recent candles have broken above the Ichimoku cloud, but the lagging line (yellow line) is still below the cloud, indicating a bull trend is yet to emerge.

To consider a possible bull trend is in motion, we would need to see the market close above the resistance level of 7,804 (blue line). This level corresponds with the previous support level that the market broke on its way down to the recent dip of 7,027.

To the downside, the market will find support on the cloud, and just below at 7,339 (black line), which corresponds to previous dips. Should those levels break the next major support would be at 7,027 (orange line).