CAC Ticks Lower as French Manufacturing PMI Dips

The CAC index is showing little movement in the Wednesday session. Currently, the index is at 5528.80, down 0.12% on the day. On the release front, France and the eurozone released manufacturing and services PMIs. Eurozone PMIs were a mix, as Flash Manufacturing PMI dipped to 59.6, missing the estimate of 60.4 points. Flash Services PMI improved to 57.6, missing the forecast of 56.5 points. The trend was similar with French releases. Manufacturing PMI slowed to 58.1, missing the forecast of 58.7 points. There was better news from the Services PMI, as the reading of 59.3 beat the estimate of 58.9 points. On Thursday, the ECB is expected to maintain interest rates at 0.00%.

ECB policymakers meet on Thursday for the first policy meeting of 2018. We’re unlikely to see any dramatics, as the ECB is likely to retain its pledge to continue buying bonds under its asset-purchase program (QE). The ECB has trimmed QE from EUR 60 billion to 3o billion/mth, but is likely to maintain interest rates for 3-6 months after that. Still, ECB policymakers have hinted that the Bank could wind up QE in September, and this has pushed the euro higher in recent weeks. ECB President Mario Draghi will speak after the statement, and if he hints that QE will not be extended, European stock markets could respond with gains. However, Draghi may prefer to keep a low profile until March, when policymakers will have had a chance to review updated economic forecasts.

With Britain on its way out of the European Union, France is hoping to pick up more spoils as foreign banks close shop in London and thousands of employees move to the continent. In November, Paris won the right to host the  European Banking Authority, which is currently based in London. France is hoping to convince bankers to choose Paris, and is providing exemptions from state -pension payments and has opened additional spots at bilingual schools. There is plenty of competition for financial sector jobs which will leave the UK, with Frankfurt, Dublin and Amsterdam all in the bidding to pick up the slack caused by Brexit.

Economic Calendar

Wednesday (January 24)

• 3:30 French Flash Manufacturing PMI. Estimate 58.7. Actual 58.1
• 3:30 French Flash Services PMI. Estimate 58.9. Actual 59.3
• 3:30 Eurozone Flash Manufacturing PMI. Estimate 60.4. Actual 59.6
• 3:30 Eurozone Flash Services PMI. Estimate 56.5. Actual 57.6

Thursday (January 25)

• 7:45 ECB Minimum Bid Rate. Estimate 0.00%
• 8:30 ECB Press Conference

*All release times are GMT

*Key events are in bold

CAC, Wednesday, January 24 at 7:30 EDT

Open: 5534.30 High: 5539.50 Low: 5521.30 Close: 5528.80

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