CAC hit by GDP report

The French equity benchmark is in the red, down 0.2% on the day, after the country registered no growth in the first quarter of 2014.

The CAC is trading at 4491 after Paris announced the economy did not grow in the first three months of this year. Yesterday it reported soft inflation figures which underline the problems the country is having. France is the second largest economy in the eurozone but the gap between them and Germany is widening and traders are taking notice, especially as its economy is slipping into economic decline like some of the southern European economies.

The European Central Bank could follow in the footsteps of the Federal Reserve, by interpreting bad news for the economy as good news for the equity markets. This morning the eurozone announced inflation of 0.7% and growth of 0.2% respectively. The stagnating eurozone economy may force the ECB to intervene which could push equity markets higher.

The CAC is finding support at the 4400 level but is finding it difficult to breach the 4500 level. Deutsche Bundesbank will issue its report on Monday at 11am (London time), and if there are hints about monetary easing from the ECB we could exceed the 4500 mark.

France 40 chart

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