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CAC Dips as Financial Stocks Falter

The CAC is in red territory on Wednesday. Currently, the index is at 5352.00, down 0.45% on the day. On the release front, the sole eurozone release is Retail PMI, which improved to 52.4. This marked a seven-month high. On Thursday, France will release Trade Balance, with the trade deficit expected to remain unchanged at EUR 4.7 billion.

On Tuesday, French Final Services PMI looked sharp, punching above the symbolic 60-point level. This marked the indicator’s highest level since May 2011. The strong reading is indicative of strong expansion, as the service sector has been buoyed by strong customer demand and strong economic conditions. French service providers remain optimistic that activity in the sector will increase in the upcoming 12-month period. The French economy has rebounded in impressive fashion in 2017, and looks to wrap up the year on firm footing, as a strong manufacturing sector has triggered improved job growth.

The eurozone economy has enjoyed a strong rebound in 2017, marked by steady growth and lower unemployment. The ECB has projected GDP of 2.2% and inflation of 1.2% for 2017. The economic recovery pushed the ECB into action, which tapered its asset purchase program, although it did extend the program until September 2018. Still, the cautious ECB said on Wednesday that it was concerned about "increased risk-taking behavior in global financial markets" as this could lead to sharp asset price corrections. The ECB is also keeping its eye on political uncertainty in Europe, notably the deadlocked Brexit negotiations and the political vacuum in Germany. In the meantime, European stock markets remain at high levels and the euro is enjoying the view from the 1.18 level.

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