Is the CAC set for further falls?

Is France assisting or hindering the Eurozone’s efforts to recover? 

French flag
Source: Bloomberg

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.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.