The CAC index has posted gains in the Tuesday session. The index has gained 0.37% and is currently trading at 5330.57 points. On the release front, the Eurozone’s current account surplus dropped sharply to EUR 22.2 billion, well below the estimate of EUR 31.3 billion. This was the lowest surplus since July 2016.
The Federal Reserve issued a hawkish rate statement at last week’s meeting, and the Federal Reserve of New York President Charles Dudley continued the upbeat message on Tuesday. Dudley cautioned the Fed against halting its current tightening cycle. Dudley said that he was not concerned with inflation levels, which are at 1.5 percent. Dudley’s upbeat remarks have sent global stock markets higher. If other FOMC members also wax positive about the economy, the odds of a December (or even September) rate hike could increase.
France’s long election season is finally over, after the second round of parliamentary elections on Sunday. President Emmanuel Macron’s En Marche easily won a majority of seats in the National Assembly, garnering about 61% of the vote. This was somewhat lower than recent polls, which had predicted that Macron would win as much as 80% of the seats in parliament. Still, it’s an impressive victory for the young and charismatic Macron, whose party is barely a year old. Macron ran on a pro-business agenda, promising to relax regulations and reform labor laws in order to make the French economy more competitive, but France’s powerful trade unions are sure to push back against any legislation that will take away rights or benefits from workers. The unions have not shied away from going on strike or organizing mass protests in past conflicts with the government, so Macron will be hard-pressed to implement reforms while keeping peace on the labor front.
One year after the Brexit referendum, which stunned Britain and the European Union, the two sides formally commenced negotiations on Monday in Brussels. The first day was primarily a photo-shoot opportunity, and the sides were on their best behavior. The parties published a concise Terms of Reference for the negotiations, which provided an outline of the talks as set by the Europeans. The paper pointedly did not mention trade talks, but rather listed the initial issues that will be discussed: 1) legal status of EU citizens in the UK; (2) Northern Ireland/Ireland border; and (3) financial obligations of the UK to the EU. With Prime Minister May trying to cobble together a minority government, her position is much weaker than before the disastrous election, and the British position has become more flexible. Philip Hammond, the British finance minister, has said that he wants a business-friendly and pragmatic Brexit and that no deal would be bad for the UK. Hammond did, however, warn the Europeans not to craft an agreement that punished the UK for leaving the club. The negotiations are expected to resume on July 10, when the parties will delve into substantial issues.
