The CAC 40 is showing little movement on Wednesday, as the index is trading at 5,115.00. On the release front, there are no Eurozone or US events on the schedule. President Donald Trump will conduct an interview with the Fox Business Network, and will discuss health care, tax reform, and the crisis in Syria and North Korea. On Friday, France will publish Final CPI. The markets are forecasting a strong gain of 0.6 percent.
The CAC has enjoyed a strong run in the first quarter of 2017, gaining 4.7 percent. European stock markets have benefited from the eurozone economy, which has recorded higher growth and inflation levels. With economic conditions improving, investor confidence levels have followed suit and posted strong numbers in Q1. Eurozone Sentix Investor Confidence climbed to 23.9 points in April, pointing to strong optimism among investors and analysts. German ZEW Economic Sentiment, which surveys the mood of German investors, sparkled in April, jumping to 19.5 points, well above the forecast of 13.2 points. This marked the strongest reading since August 2015.
European stock markets are steady on Wednesday, as investors remain cautious about geopolitical tensions, particularly in Syria and North Korea. The US bombed a Syrian military base last week, in response to a chemical attack by Syrian warplanes. Russia has strongly condemned the US move, chilling relations even further between the US and Russia. President Trump has also sent warships to the Korea peninsula, in a show of strength against North Korea, which continues to test ballistic missiles in defiance of the international community. If tensions escalate on either of these fronts, stock markets could lose ground.
On Monday, Federal Reserve Chair Janet Yellen provided insights into the Fed mindset. She said that with the economy close to full employment and 2 percent inflation, Fed policymakers were looking to reduce the support that the central bank was providing the economy. The minutes of the March meeting indicated that the Fed plans to trim the $4.5 trillion balance sheet, which has ballooned as a result of the huge asset-purchase program which started in 2008. The Fed plans to raise rates twice more in 2o17, with the next rate expected in June. Yellen emphasized that the Fed’s policy stance is neutral, as interest rate increases will be gradual, given that the economy is growing at a moderate pace.
