CAC: Consumer Confidence Takes Stocks Lower – Politics & Trump Tariffs Weigh
Consumer confidence showed an unexpected drop this morning adding to the woes of stocks. Major indices continue to decline as implications of a tariff war set in.
- Consumer confidence declines sharply
- Implications of tariffs reverberate through market
- Domestic politics continue to weigh heavily
Consumer confidence showed un an unexpected drop to 90 when most analysts had expected the number to remain unchanged at 94. The weak number immediately had an affect on the CAC, which dropped 70 points or 0.97%.
The weak outlook from consumers adds to the general dire sentiment in the market. Domestic political woes are one of the main factors driving stock prices at the moment. Political uncertainty leading to a de facto hung parliament is spooking investors. The government still has managed to get the budget approved.
Trump Tariff Talk
Recent talk of tariffs from the incoming Trump administration has had repercussions on global stocks. While the DOW hit a new all-time high yesterday the CAC dropped 0.75% on the day.
Tariffs could be coming for China but also for the EU. The USA is one of France’s largest trading partners, often ranking second for exports. The most lucrative sectors are aerospace and luxury goods.
Technical View
The chart above for the CAC shows a market in a bear trend with prices well below the Ichimoku cloud. The recent formation of a rectangle created a consolidation area (blue rectangle).
These formations can lead to a continuation of the trend or a pivot. In this case we can see that yesterday’s candle confirmed the continuation of the bearish trend. The next target I see is the support of 7,027 (orange line).
That level coincides with the low from the previous bearish trend from may to August. From that low the market recovered by 11% before turning south again.
The level should offer significant resistance and is likely to lead to a correction. Should that level break the next support level would be at 6,753, which coincides with a previous dip lower in October 2023.
To the upside the closest resistance can be found on the lower side of the blue rectangle at 7,202.
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