Low volumes hinder CAC rally

The France 40 is a touch lower after yesterday’s surge on the back of the US jobs report.

France flag
Source: Bloomberg

The Frankrijk 40 is trading at 4484, and a shortage of corporate and economic news from France has left the market trading within a small range. However, the fact that it has managed to hold on to most of its gains from yesterday’s rally is a bullish signal.

Soft factory orders from Germany are likely to lead to additional monetary easing in the long run. Additionally, waning growth and deflationary pressure from France and the wider region will boost the likelihood of European Central Bank easing.

Yesterday, Mario Draghi said interest rates will remain at 0.15% for a prolonged period. The cumulative effect of the soft French and eurozone figures will keep the pressure on Mr Draghi.

24 of the 40 stocks that make up the French equity benchmark are trading above their 50-day moving average. However, embattled bank BNP Paribas is trading below its 50-DMA and it accounts for nearly 7% of the index. 

On Tuesday, the French government will announce its budget balance and trade balance figures, but the focus of next week will be on the inflation data on Thursday. Signs of deflation could push the France 40 to 4525, with the 4440 acting as support. 

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