CAC creeps higher

French stocks are in positive territory and confidence is seeping back into the market after last week’s selloff.

France’s equity benchmark is trading at 4165, up 0.5%, pushed higher by a combination of short-covering and bargain-hunting. A lack of bad news from Argentina and Turkey has prompted dealers to buy back into the market. There is a sense of cautious optimism in the European equity market, but if the fear of a default by an emerging-market economy returns we could see a similar fall to that witnessed on Friday.

There is little in the way of the economic news from the eurozone today. The Federal Reserve starts its two-day meeting tonight, and there will be an announcement tomorrow. In December the Fed reduced the size of the stimulus package from $85 billion per month to $75 billion per month, and the consensus is for another trimming of $10 billion tomorrow.

The CAC has managed to stay above the 4120 support level and, as Alastair McCaig explained, it could head towards the 4220 level. If it were to breach this support level, it might continue towards the 4060 mark.

France 40 chart

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