The CAC index has headed lower in the Thursday session. Currently, the CAC is trading at 5264.50, down 1.11 percent. It’s a quiet day on the release front, with no French or eurozone events on the schedule. The president of the ECB, Mario Draghi, will speak at an event at the University of Tel Aviv. On Friday, the eurozone publishes current account and consumer confidence.
The political uncertainty which has gripped Washington seems to be growing by the hour, and predictably, global stock markets have responded to the crisis with losses. Faced with mounting criticism from Democrats and even some Republicans, the Justice Department has agreed to appoint a former FBI director as independent counsel to investigate possible Russian involvement in the US presidential election as well as any connection between Trump and the Russians during the election campaign. The Trump administration is in damage control mode, as the media is having a field day with bombshell reports. On Tuesday, reports surfaced that Trump had asked former FBI director James Comey to close an investigation into ties between Russia and Trump’s former security adviser, Michael Flynn, leading some lawmakers to question whether Trump had committed obstruction of justice. As if this wasn’t enough for Trump’s aides to deal with, the president is under fire for passing classified intelligence to the Russian foreign minister. Trump initially denied the claim, but has since admitted that he did share intelligence with the Russians, arguing that he had acted within his rights. With the Trump administration frantically trying to douse political fires, investors are concerned that Trump will have more difficulty passing into law his plans for increased stimulus and tax reform.
The markets were on the money in their predictions of Eurozone GDP and and CPI data. Final CPI matched the forecast with a strong gain of 1.9% in April, considerably higher than last month’s gain of 1.5%. Eurozone inflation is closing in on the ECB’s target of 2.0%, which could increase pressure on the ECB to consider tapering its ultra-loose monetary policy. Germany, for one, is not pleased with the ECB’s ultra-loose monetary stance, which it says is not suited to the strong economic conditions in the country. On Tuesday, Eurozone Flash GDP was unrevised from the April forecast, posting a gain of 0.5% in the first quarter. The eurozone continues to show improved numbers in 2017, boosted in no small part by the German economy, which expanded 0.6% in the first quarter.
