CAC Edges Lower in Holiday-Thinned Trade

European stock markets are having a quiet Christmas week, and the CAC is showing limited movement in the Thursday session. Currently, the CAC is at 5358.30, down 0.20% on the day. There are no French indicators for the remainder of the week. The sole event on Thursday was the release of the ECB Economic Bulletin, which comes two weeks after the December ECB policy meeting.

The French economy continues to rebound, as indicators in the second largest economy in the eurozone continue to point upwards. The economy has been expanding, exports are up and unemployment has dropped. Consumer spending, a key driver of economic growth, looked sharp in November, jumping 2.2%. The impressive reading comes after a decline of 1.9% in October and marked the highest gain since February 2012.

The eurozone economy has rebounded in 2017. France has also enjoyed stronger economic conditions. The manufacturing and export sectors have benefited from stronger global demand, and unemployment levels have dropped. The election of Emmanuel Macron, who is pro-business and in favor of streamlining the economy, has impressed investors and boosted the French stock markets. The CAC has responded positively, climbing 10.6% in 2017. Fourth quarter numbers in both France and the eurozone have been steady, and expectations are that the positive trend will continue into 2018, which should translate into further gains for the CAC.

Inflation, long a sore point in the eurozone economy, has moved higher. Annual average inflation inched up to 1.5% in November, up from 1.4% in October. This marked a multi-year high. Earlier this month, in a nod to stronger economic activity in 2017, the ECB raised its forecasts for growth and inflation for the eurozone from this year through to 2019. Still, inflation remains well below the ECB target of around 2.0%, and ECB policymakers are unlikely to announce an end to their stimulus package until inflation moves closer to the 2.0% target.

Economic Calendar

Thursday (December 28)

• 4:00 ECB Economic Bulletin

Friday (December 29)

• 4:00 Eurozone M3 Money Supply. Estimate 4.9%

*All release times are GMT

*Key events are in bold

CAC, Thursday, December 28 at 8:50 EDT

Open: 5369.50 High: 5370.50 Low: 5351.50 Close: 5358.30

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