The CAC index has lost ground in the Thursday session. Currently, the CAC is trading at 5,351.00, down 0.60% on the day. On the release front, there are no French or eurozone events on the schedule. On Friday, the eurozone releases current account, which is expected to rise to EUR 26.2 billion.
All eyes are on Spain, as investors are nervously monitoring the constitutional crisis in Catalonia. The Spanish stock market is down 1.0% on Thursday, and this has dragged down other European stock markets, including the CAC. The Catalan government ignored a deadline to withdraw its independence bid, prompting Madrid to threaten it would impose direct control on the region on Saturday. Analysts continue to digest European corporate earnings for the third quarter, and the results will likely have a strong impact on European stock markets next week.
European Union leaders are meeting in Brussels on Thursday and Friday. French President Emmanuel Macron has pushed trade issues onto the agenda. Macron wants the EU to proceed with caution on trade talks that deal with agriculture, as increased imports of beef and other farm products into the EU could severely impact the French farm sector. The EU is currently holding talks with the Mercosur bloc, which includes Argentina and other South American nations, and is planning to hold free trade talks with Australia and New Zealand.
What’s next for Catalonia? The cat-and-mouse game between the Spanish and Catalan governments continues, as a Thursday deadline looms. The Spanish has given Catalan President, Carles Puigdemont until Thursday to recant his declaration of independence. If Puigdemont refuses, Madrid has threatened to trigger Article 155 of the Spanish constitution, which would allow the central government to disband the Catalan parliament and impose direct rule. However, this clause has never been used, and could set off a violent reaction in Catalonia, with emotions already at a fever pitch. The deepening constitutional crisis has led hundreds of companies to start leaving Catalonia, and the Standard and Poor’s rating agency has said that the region could face a recession if the situation is not resolve. Investment projects are at a standstill in the region, and if the situation worsens, investors could get nervous and the European stock markets could respond with losses.
Spain to Trigger Suspension of Catalan Autonomy on Saturday
Economic Calendar
Thursday (October 19)
- There are no French or eurozone events
Friday (October 20)
- 4:00 Eurozone Current Account. Estimate 26.2B
*All release times are GMT
*Key events are in bold
CAC, Thursday, October 19 at 7:20 EDT
Open: 5371.50 High: 5378.50 Low: 5345.00 Close: 5351.00
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Kenny Fisher