The CAC index has started the trading week quietly. In the Monday session, the index is at 5,338.75, up 0.12% on the day. On the release front, manufacturing numbers in France and the eurozone improved in September. French Final Manufacturing PMI rose to 56.1, its highest level since April 2011. In the Eurozone, Final Manufacturing PMI improved to 58.1, just shy of the estimate of 58.2 points.
All eyes were on Spain over the weekend, as the region of Catalonia held a referendum on Sunday. The vote was marked by violence as police tried to shut down polling centers and confiscated ballots. The national government banned the referendum, and police used tear gas and rubber bullets against defiant voters, causing over 800 casualties. Catalonian officials claimed that 90 percent of voters had voted for independence. The stage has now been set for a full-blown constitutional crisis with Madrid. The Catalan regional government is holding an emergency meeting on Monday to discuss what steps it will take regarding independence, and the markets will be monitoring the situation, which remains fluid. Although, the drama in Spain is not expected to have a serious impact on the eurozone nervous investors reacted to the news on Monday by selling euros in favor of the dollar and Swiss franc.
There was good news from the manufacturing front on Monday, as French Final Manufacturing PMI accelerated for a fourth straight month, and continues to point to expansion. The French economy has rebounded in 2017, as growth is up and unemployment has fallen. Last week, the Bank of France revised upwards its growth forecast to 1.7 percent, up from 1.6 percent in July and 1.4 percent in June. Villeroy de Galhaum, head of the Bank of France, said that although the economy was improving, a growth rate of 1.7% was still short of the eurozone growth rate of 2.0 percent. The Bank’s forecast is in line with that of the OECD, which has revised its growth forecast for France from 1.3 percent to 1.7 percent.
