The CAC 40 index has posted considerable losses in Thursday's session. At the time of writing, the index is at 5205.00, down 0.97% on the day.
On the release front, there are no data releases on schedule. On Friday, France releases industrial production, which is expected to post a small gain of 0.1%.
It’s been a tumultuous week for global stock markets, and the CAC has dropped 2.3% percent this week. February has been dismal for European assets so far, and the French index shed 5.5% this month.
US markets have set the tone, with the Dow Jones posting its biggest one-day loss on Monday. The catalyst for the current turbulence is investor concern that inflation could rise in the US, which in turn would trigger additional rate hikes from the Federal Reserve. This would make dollar-denominated assets more attractive than European assets.
US stock markets posted losses on Wednesday, and the downward trend has continued in the European stock markets on Thursday.
Meanwhile, what happens in Germany - as the largest member of the eurozone - often has a significant impact on the rest of the eurozone. There is an audible sigh of relief in France and elsewhere, as Germany appears on the verge of forming a new government, after months of negotiations.
On Wednesday, the socialist SDP and Angela Merkel’s conservatives announced that they had finalized a coalition agreement. In the last government, the SDP was the junior partner of the conservatives, but this time around the SDP has extracted major concessions from Merkel, notably control of the powerful finance ministry.
This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, but it's expected to pass this final hurdle.
Market Jitters Remains Strong
Economic Calendar
Thursday (February 8)
Friday (February 9)
- 2:45 French Industrial Production. Estimate 0.1%
CAC - Thursday, February 8 at 7:10 EDT
Open: 5,223.90 High: 5,248.50 Low: 5,205.50 Close: 5205.00
