CAC Unchanged as French Stock Market Closed for Holiday

The CAC is unchanged in the Monday session, as the Paris stock exchanged is closed for the May 1 holiday. Currently, the index is trading at 5,267.33. There are no French or Eurozone indicators on Monday. On Tuesday, the Eurozone and France release Manufacturing PMIs, as we’ll get a look at as the Eurozone Unemployment Rate.

It’s week two of the second round of the French presidential campaign, with voters choosing between centrist Emmanuel Macron and far-right candidate Marie Le Pen. The markets have priced in a victory by Macron, which is why we didn’t see significant movement in European stock markets last week. The opinion polls ahead of the first round were on the money, correctly forecasting that Macron would win 24% of the vote and Le Pen 22%, with both advancing to the May 7 runoff. The markets are relying on the polls ahead of the second round, which continue to show Macron with a comfortable lead of 60-40. Macron should prevail, but Brexit and Trump are fresh reminders that polls can be off the mark and surprises in politics can always happen. Still, unless polls shift dramatically this week, the election campaign is unlikely to have much impact on European stock markets.

The ECB has implemented an ultra-loose monetary policy since 2008, in an attempt to kick-start the eurozone economy and raise inflation levels. With growth and inflation pointing upwards in the first quarter, will we see a tightening of policy? The ECB appears in no rush to make any changes, even though inflation levels have improved. The estimate for CPI in April improved 1.9% in April, up from 1.5% in March. Still, Mario Draghi stated on Thursday that the ECB was not changing its inflation forecast. The ECB held rates at a flat 0.00%, and the rate statement and comments from Mario Draghi were more dovish than the markets would have liked. The current ultra-loose policy, which includes a quantitative easing program of EUR 60 billion/mth, has been in place since 2008. Draghi acknowledged that the eurozone is in better shape, noting that economic conditions had improved and downside risks had decreased. The ECB holds its next meeting in June, and if growth and inflation data continue to point upwards, the markets will again be looking for some tightening from the central bank.

Economic Calendar

Monday (May 1)

  • There are no French or Eurozone events

Tuesday (May 2)

  • 3:50 French Final Manufacturing PMI. Estimate 55.1
  • 4:00 Eurozone Final Manufacturing PMI. Estimate 56.8
  • 5:00 Eurozone Unemployment Rate. Estimate 9.4%

*All release times are EST

*Key events are in bold

CAC, Monday, May 1 at 8:20 EST

Open: 5269.50 High: 5287.50 Low: 5265.36 Close: 5267.33

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.