The CAC index has posted losses in Friday's session. At the time of writing, the index is at 5124.00, down 0.54% on the day.
On the release front, French industrial production came in at 0.5%, above the estimate of 0.1%.
It’s been a tumultuous week for global stock markets, and the French index has dropped 3.6% percent this week.
February has been dismal for European markets, and the CAC has shed 6.9%. Earlier this week, the index dropped to its lowest level since early September. And it keeps losing ground on Friday, following losses in the North American and Asian stock markets.
Ironically, the catalyst for the current sell-off has been solid economic data in the US; namely, improved payrolls and wage growth reports. This has raised concerns of inflation, which could lead to a quicker pace of rate hikes from the Federal Reserve. This sentiment has sent the bond markets higher, while weighing on global stock markets.
A rebound in the global economy has been a boon for eurozone exports, and this has boosted France’s manufacturing sector. We’ll take a look at eurozone industrial production next week. In November the indicator surged to 1.0%, marking a 3-month high.
Meanwhile, after months of intense negotiations, German Chancellor Angela Merkel appears to have put together a new coalition government. Earlier this week, Merkel’s conservative party and the socialist SDP announced that they had finalized a coalition agreement.
In the last government, the SDP was the junior partner of the conservatives, but this time around the SDP has extracted major concessions from Merkel, including the finance and foreign affairs ministries. This could present a unique opportunity for French President Emmanuel Macron, as the new German government will likely undergo a significant shift in its stance towards the eurozone.
Under the previous government, there was a reluctance to provide large bailouts to weaker eurozone members, such as Cyprus and Greece. However, struggling members will likely find a sympathetic ear for financial help from the SDP. As well, Macron’s vision of a more integrated eurozone, complete with a budget and finance minister, may dovetail nicely with the SDP’s stance towards the eurozone.
Economic Calendar
Friday (February 9)
- 2:45 French Industrial Production. Estimate 0.1%. Actual 0.5%
CAC, Friday, February 9 at 6:25 EDT
Open: 5,223.90 High: 5,248.50 Low: 5,205.50 Close: 5205.00
