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CAC Subdued Over Lack of Fundamentals

The CAC index has posted considerable gains in the Monday session. Currently, the CAC is at 5502, down 0.17% on the day. On the release front, there are no French or eurozone events on the schedule. On Tuesday, France releases CPI and the eurozone will publish inflation and GDP reports.

European equity markets had a strong week and the CAC joined the bandwagon, posting strong gains of 2.4 percent. Investors responded positively to last week’s meeting between EU Commission President Jean-Claude Juckner and U.S. President Trump. The two leaders agreed to take concrete steps to eliminate tariffs and improve the trade relationship between the U.S and the EU, which has been battered in recent weeks. Most importantly, Trump agreed to hold off on threatened tariffs against European car manufacturers, pushing the shares of French car makers higher and boosting the CAC.

French indicators ended the week on a disappointing note. Flash GDP for the second quarter dipped to 0.2%, shy of the forecast of 0.3%. This marked the smallest gain since Q3 of 2016. There was no relief from consumer spending, which dropped from 0.9% to 0.1% in June, short of the estimate of 0.6%. There could be more bad news on Tuesday when France releases Preliminary CPI. The indicator is expected to decline 0.3%. If this forecast is accurate, it will be yet another indication that the French economy has hit some nasty headwinds in the second quarter.

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