The French index fell early on Tuesday, only to bounce late. Luxury was the big savior for the session, but there are still headwinds.
CAC
The French index has fallen a bit during the early part of the trading session on Tuesday as we continue to see quite a bit of volatility in global indices around the world. Keep in mind that the shot higher was based on the idea that the Americans and the Iranians were holding talks on Monday, but that has since been denied and we’ve seen the French market roll over a bit.
Furthermore, oil picked up a bit of strength during the session on Tuesday so that puts a little bit of negativity on the overall risk sentiment for indices around the world.
The market is currently hypersensitive to the latest headlines, but all things being equal, the market is likely to continue to see a lot of questions asked of it, with the uncertainty being a major factor in all things trading.
Domestic Outlook and Technical Levels
Domestically, the French outlook darkened as the flash PMI data fell to a 5-month low of 48.3 signaling a contraction in the private sector driven by hesitancy ahead of local elections and the very real problem of energy driven inflation.
While luxury giants like LVMH and Hermès provided late day cushion as they both gained about 1%, the broader index remains heavy as the French Central Bank has trimmed growth forecast due to sustained geopolitical risk.
As I look at the chart, if we can clear the 7,850 level that could build on some type of recovery effort. If we can break down below 7,600 euros, that could be very bad. In that scenario, we would likely see not only the French index fall, but many other indices could follow right along with it.