CAC Follows Global Rally, Shakes off Vote of No Confidence
The minority government is facing calls from left- and right-wing parties for a vote of no confidence that would likely lead to new elections.
- Call of no confidence to lead to early elections
- Global stock rally continues
- ECB member Cipollone pre-recorded interview
The CAC bounced higher today, up 0.75% after yesterday’s gain of 1.27%. French stocks are rebounding following the global stock market rally. The DAX and the S&P 500 hitting new-all-time highs.
The minority government used a special clause in the constitution that made the left and right parties call for a vote of no confidence. The vote is likely to lead to new elections and a caretaker government.
Both factors usually have a negative impact on stocks, however, in this case investors have taken the news positively. The budget has been passed, which is good news in itself and will bring a reduction in the deficit.
The call for elections is seen as giving the possibility of electing a stable government. Something that the previous round of elections didn’t produce. The CAC has underperfomed its peers such as the DAX or FTSE MIB this year. There could be considerable room for recovery if the political situation stabalizes.
CAC Live Chart
Central Bankers to Speak Today
Later today ECB’s Cipollone will be speaking in a pre-recorded interview to be shown at an event in Milan. Market sentiment is well cemented in another rate cut at the next meeting on December 12.
The market will be watching for clues on how quickly the ECB could act. Some economists see the central bank interest rate falling to 2.5% in Q1 of 2025.
Federal Reserve members are also speaking today. Fed board of governors Kugler is set to speak later today. And Chicago Fed CEO Goolsbee is also giving a speech later today.
The markets will be looking for further tips on the progression of monetary loosening. Bets on another rate cut in December have risen, the CME FedWatch tool shows a probability of 75% for a cut, up from 52% a week ago.
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