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The economic data coming out of eurozone countries in the last quarter has been less than inspiring, none more so than from France. The figures released by the French government do not show an economy that is recovering but one that is continuing to struggle.
France’s strongest ally in Europe has been Germany, a country that has also seen confidence ebb away as yesterday’s ZEW economic sentiment reflected; the seventh month in a row where the figures had been worse. With Germany recently winning the World Cup, history tells us they could expect to see an upturn in confidence and an improvement in their equity markets. How much, if any, of that rubs off on the French is up for debate.
It is not just poor economic data that is hampering the French, it has also seen a prolonged period of poor global relations. Most obviously the French political parties’ displeasure with the US. The fine that BNP Paribas received was heavy but it was guilty (and unrepentant) for its money laundering crimes. Add to this the worries that France is no longer a country open for business, as it is overly protective of its companies to the detriment of fair competition.
Looking at the charts, a break below 4300 on the CAC would be worrying, and a close below 4280 could signal a collapse. Although most of the European equity markets have had a correction this index looks the most susceptible for further falls.