The CAC 40 continues to see a lot of pressure, as fiscal concerns are the main headline in France. With rising rates, this shows markets aren’t trusting the French government at the moment.
CAC 40
The Parisian index has fallen fairly significantly during the early part of the trading session on Thursday to test the demand zone.
Quite frankly, it has a lot less to do with technical analysis at this point and a lot more to do with the bond market. French yields continue to climb, and that's not a good thing for equities, especially considering that they are climbing due to the fact that traders are not happy with the fiscal situation in Paris.
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With this being the case, money is leaving France
You are now seeing the CAC pay the price. I do think eventually this ends up being a nice buying opportunity, but we are nowhere near there, and we need to see rates drop in France in order to see people willing to jump in and find value.
There are some great companies in France that I would be looking into, such as Airbus, Hermès, LVMH, etc. But as long as this continues to be a major problem—the debt concerns—the stock market will suffer.
What's making things worse is we're now starting to see Italian and Greek debt sell off. So this could be a Europe-wide problem before it's all said and done. We just don't know.
Ultimately, this is a market that I'm looking to buy eventually. I don't want to jump in and short now. I've missed the move if I were to want to do that. This is going to be about rates dropping in France. Once they do, then we have a shot at the CAC turning things around. If they do not, then we will continue to see the equity markets in Paris struggle.
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