The CAC index has paused on Tuesday, after registering gains in the Monday session. Currently, the CAC is trading at 5,360.30, up 0.18% from Monday’s close. On the release front, there was only one eurozone event. Producer Price Index gained 0.3%, above the forecast of 0.1%. This marked the indicator’s strongest gain since January. On Wednesday, France and the eurozone will release Final Services PMI and ECB President Mario Draghi will speak at an event in Frankfurt.
The CAC enjoyed a robust September, as the index jumped 4.1 percent. Investors have given the thumbs up to a stronger French economy, which has rebounded in 2017. There was good news from the manufacturing front on Monday, as French Final Manufacturing PMI accelerated for a fourth straight month, and continues to point to expansion. The services sector continues to show expansion, and French Services PMI is expected to climb to 57.1 on Wednesday. Last week, the Bank of France revised upwards its growth forecast to 1.7 percent, up from 1.6 percent in July and 1.4 percent in June. Villeroy de Galhaum, head of the Bank of France, said that although the economy was improving, a growth rate of 1.7% was still short of the eurozone growth rate of 2.0 percent. The Bank of France forecast is in line with that of the OECD, which has revised its growth forecast for France from 1.3 percent to 1.7 percent. At the same time, the OECD has said that continued French growth is contingent upon President Emmanuel Macron implementing a long-term plan to slash public spending, which is the highest in the 35-member OECD.
European investors continue to keep a watchful eye on events in Spain. Catalonia, one of the richest regions in the country, was a scene of chaos and violence over the weekend. The Catalan regional government attempted to hold a referendum on independence, but the national government was adamantly opposed to the move and banned the vote. When voters showed up at polling stations, the police moved in with force, injuring close to 900 civilians. Catalonian officials claimed that 90 percent of voters had voted for independence, setting the stage for a full-blown crisis with Madrid. The Spanish constitution prohibits any region from seceding, but Catalan Carles Puigdemont has not showed any intent to back down, and has called for a general strike on Tuesday. Although the euro lost ground on Monday, the crisis is not expected to continue to weigh on the currency, given that the referendum is viewed as an issue local to Spain, and not to the eurozone in general. As well, the Spanish economy is in good shape, so a constitutional crisis is unlikely to affect the country’s economic growth.
Economic Calendar
Monday (October 2)
- 3:45 French Final Manufacturing PMI. Estimate 56.0. Actual 56.1
- 4:00 Eurozone Final Manufacturing PMI. Estimate 58.2. Actual 58.1
- 5:00 Eurozone Unemployment Rate. Estimate 9.0%. Actual 9.1%
Tuesday (October 3)
- 5:00 Eurozone PPI. Estimate 0.1%
*All release times are EDT
*Key events are in bold
CAC, Tuesday, October 3 at 8:15 EDT
Open: 5361.50 High: 5366.50 Low: 5353.50 Close: 5360.30
