The CAC index has reversed directions in the Wednesday session and posted slight gains. The CAC has risen 0.91% and is currently at 5315.95 points. There are no eurozone or French indicators on the schedule. On Thursday, France releases Trade Balance, with the trade deficit expected to widen to EUR 5.9 billion. On Thursday, ECB policymakers will set the benchmark rate, which is expected to remain at a flat 0.00%.
France will hold two rounds of voting for the 577 seats in the National Assembly, with the first round slated for June 14, with a second vote a week later. French President Emmanuel Macron won the presidential election in convincing style, and his LREM party is on track to win the first round of the legislative election. The latest polls are showing Macron’s party with 30 percent of the vote, well ahead of the conservative Republicans, at 22 percent. The polls are forecasting that Macron is well on his way to winning a strong majority in parliament. Macron has a pro-business agenda, and wants to streamline government and improve the country’s productivity. A cooperative parliament would enable Macron to implement his pro-business agenda, and the French stock market will likely head higher if Macron does well at the ballot box.
The ECB meets on Thursday to set interest rates, but investors are not expecting any significant moves from the central bank. The French stock market has shown limited movement this week, and the ECB meeting could well be a non-event. The benchmark rate has been pegged at 0.00% since March 2016, and policymakers do not appear in any rush to alter course. At the same time, the eurozone economy has improved in recent months, and the markets would like to see some minor changes in policy, or at least some mention in the rate statement of the improvement in economic conditions. The ECB has been reluctant to taper its asset-purchase program or raise interest rates, despite grumbling from economic powerhouse Germany, which want the ECB to tighten monetary policy. The markets will be poring over the rate statement and Draghi’s follow-up comments, looking for any nuances which are hawkish in tone. If this occurs, the CAC could respond positively and move to higher levels.
Wednesday (June 7)
- There are no Eurozone or French events
Thursday (June 8)
- 2:45 French Trade Balance. Estimate -5.9B
- 5:00 Eurozone Revised GDP. Estimate 0.5%
- 7:45 ECB Minimum Bid Rate. Estimate 0.00%
- 8:30 US ECB Press Conference
*All release times are EDT
*Key events are in bold
CAC, Wednesday, June 7 at 9:40 EDT
Open: 5265.25.50 High: 5322.45 Low: 5253.50 Close: 5315.95
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