The CAC index continues to have a quiet week. Currently, the CAC is trading at 5,530.00, up 0.50% on the day. On the release front, there are no French or eurozone indicators. In the US, today’s highlight is the Federal Reserve rate statement. On Thursday, the focus will be on manufacturing, as France and the eurozone release Final Manufacturing PMI.
The CAC continues to move upwards, and has climbed 2.8% since October 23. European stock markets have posted strong gains on Wednesday, in response to positive European corporate earnings. Strong performers on the CAC include French car makers Peugeot and Renault, which have gained 1.67% and 0.87%, respectively. On Tuesday, French data was positive, as the French economy continues to improve. Flash GDP remained at 0.5% in the third quarter, matching the estimate. Consumer spending rebounded with a gain of 0.9%, beating the estimate of 0.6%. Preliminary CPI improved to 0.1%, matching the forecast.
After staying on the sidelines for months, the ECB announced last week that it will begin tapering its asset purchase program, from EUR 60 billion/mth to EUR 30 billion/mth. The program, which was scheduled to end in December, has been extended to April 2018. However, ECB President Mario Draghi added a dovish twist to the move, stating that the program would remain open-ended. This provides the cautious ECB with the ability to keep the program in place beyond April without causing strong movement in the currency and stock markets. The euro has reacted sharply to ECB moves (or lack of a move) in the past, and Draghi would like to minimize the ECB’s involvement in market movement.
