CAC Shrugs off Solid French Industrial Production, Draghi Speech Next

The CAC is unchanged in the Wednesday session, as the index is trading at 5,395.50.On the release front, French data was better than expected. Industrial production posted a gain of 2.0%, above the estimate of 1.2%. France’s trade deficit improved to EUR -5.4 billion, better than the forecast of EUR -5.9 billion. The markets are keeping a close eye on ECB President Mario Draghi, who will speak about monetary policy in the Dutch House of Representatives. On Thursday, the US releases PPI, an important inflation indicator.

The eurozone has posted stronger numbers in the first quarter, and this has included industrial better production and manufacturing numbers in France and Germany. In France, industrial production jumped 2.0% in March, ending a streak of three consecutive declines. The Markit France Manufacturing PMI rose to 55.1 in April, its highest level since 2011. German industrial production in March declined 0.4%, but this was just a blip, as industrial production in the first quarter posted a respectable gain of 1.6%. German Factory Orders came in at 1.0%, above the forecast of 0.7%. An improvement in global economic conditions has boosted the demand for Eurozone exports, notably cars and machinery. A weak euro has made European exports more attractive and helped boost the manufacturing sector. The German economy will get a report card on Friday, with the release of Preliminary GDP for the first quarter. The markets are predicting a gain of 0.6%. A better than expected GDP report could have a positive effect on European stock markets and push the CAC to higher levels.

Donald Trump’s unconventional style has caused consternation and uneasiness in the markets, but his latest move could turn into a political earthquake. Trump abruptly fired FBI director James Comey on Tuesday, stunning the political establishment in Washington. Comey, who has been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, clearly has been a thorn in Trump’s side. The White House has claimed that it fired Comey over his handling of an email scandal involving Hillary Clinton, but the move has been roundly condemned by the Democrats, and some key Republicans have also voiced opposition as well. The political firestorm could heat up further, with calls in Congress to appoint a special prosecutor into Trump’s connections with Russia. Has Trump gone one step to far? The dollar has already recorded some losses since the firing, and this latest controversy could cause some jitters among investors and send the stock markets downwards.

Economic Calendar

Wednesday (May 10)

• 2:45 French Industrial Production. Estimate 1.2%. Actual 2.0%
• 2:45 French Trade Balance. Estimate -5.9B. Actual -5.4B
• 8:00 ECB President Mario Draghi Speaks

Thursday (May 11)

• 4:00 ECB Economic Bulletin
• 5:00 EU Economic Forecasts
• 8:30 US PPI. Estimate 0.2%

*All release times are EDT

*Key events are in bold

CAC, Wednesday, May 10 at 8:35 EDT

Open: 5397.50 High: 5400.50 Low: 5377.00 Close: 5395.50

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