CAC 40

CAC 40

20 June 2018Reading time: 2 minutes

From the beginning of May the CAC40 increased with 9% to a preliminary all-time high of 5,637 points (21.05.2018). This level of the index was no longer reached since December 2017. In the past weeks the CAC40 plummeted again due to, among other things, the formation of the populist government in Italy and the removal of the Spanish prime minister Mariano Rajoy. It remains to be seen if the European stock market will come at ease within the coming period.

The national statistics bureau INSEE in May adjusted the economic growth over 2017 from 2% to 2.2%. The inflation remained stable in April on 1.6% and employment opportunities improved on an annual basis with 1.4%.

By the end of May the European Commission claimed that France has reduced its budget deficit to an acceptable level. Since 2009 France was in the ‘excessive deficit procedure’, where the country was instructed to take action in order to reduce their debt. The European Commission expects that the French budget deficit over 2017 will end at 2.6% of the gross domestic product (GDP). This is under the EU limit of 3%. In 2016 the budget deficit of France was still 3.4%. For 2018 the IMF counts on a shortage of 2.3% and 2.8% for 2019.

Early June, the International Monetary Fund (IMF) praised France as one of the precursors within Europe as to economic reforms. Led by president Emmanuel Macron, multiple ambitious reform goals where set. However, France still has (after Italy) one of the largest government debt within the European Union. Therefore the IMF would like to see that France becomes more specific about how the country wants to reduce the public spending. The institute also suggests that France should increase the retirement age and improve the distribution of welfare among the population.

The future price of the index is subject to several political, industrial and sector specific as well as economic factors. Investors should consider such risk when making their investment decisions. Developments can be different at any time than investors expect, which can result in capital losses.

Vontobel products on CAC40 are tradable at DEGIRO.

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01/03/2021 03:02:37