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

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.