CAC Slide Continues as Chinese Tariffs Send Markets Lower

The CAC index continues to head lower and has posted sharp losses in the Friday session. Currently, the CAC is trading at 5104 points, down 1.21% on the day. On the release front, there are no French or eurozone releases on the calendar.

Global stock markets are seeing red this week, and the downward trend has sent the CAC lower. The index has dropped 3.7% percent of its value this week, as investor risk appetite has waned after US President Trump slapped 25% tariffs on up to $60 billion worth of Chinese imports on Thursday. Trump said that the tariffs, which will take effect within 15 days, are needed to address the massive trade deficit with China, which stands at $375 billion. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which amounted to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has promised exemptions to the EU and some other countries. There is serious concern that these moves could ignite a global trade war, and a downturn in the Chinese economy could spread and cause a global recession. Predictably, US stock markets were down sharply on Thursday, and the gloom has spread to European stock markets in the Friday session.

French PMIs continue to point to expansion in the manufacturing and services sectors, but the numbers were softer in February than in the January releases. The Manufacturing PMI dropped to 53.6, missing the estimate of 55.6. This marks a third straight drop, and this reading was the weakest since March 2017. The Services PMI followed a similar trend, dropping to 56.8, which was shy of the estimate of 57.0 points. This marked a 10-month low. German and Eurozone PMIs also showed weaker expansion in services and manufacturing, which could raise concern about the strength of the eurozone recovery and weigh on investor risk appetite.

China is not backing down, and why should they ?

Trade War Taking its Toll on Markets

Economic Calendar

  • There are no French or eurozone events

*All release times are DST

*Key events are in bold

CAC, Friday, March 23 at 8:15 EDT

Prev. Close: 5105 Open: 5115 High: 5121 Low: 5059 Close: 5105

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.