France 40 fails to take off

Like the rest of the European equity markets, the CAC continues to drift lower.

Outside the Vivendi building
Source: Bloomberg

The France 40 is one of the worst performing equity indices in Europe, with companies like Vivendi and ENGIE SA leading them lower.

The stigma of the weak flash manufacturing and service PMI figures that were released on Monday has hung over the index. This lack of encouragement to move the index higher has only been compounded by this afternoon’s disappointing US final GDP figures. The pace of the recovery in both the eurozone and the US has seen more and more questions asked as to where fair value might lie.

The promise the European Central Bank has made over tackling the euro strength and stimulating the recovery is coming to the end of its honeymoon period, as investors are increasingly looking for signs of improvement rather than words of encouragement.

Like its counterparts in the eurozone, the France 40 has struggled under the burden of the ongoing Ukraine and Russia energy supply wrangling, and this is a worry that will not go away.

The 4500 level had proven to be a real region of resistance when the CAC was trying to move higher, and the ease with which it has broken back below this without too much of a fight looks ominous.

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