CAC: French PMI Lower Than Expected – Market Attention on Elections

French Flash PMI’s all lower than expected indicating contraction in the economy. The market also continues to deal with concerns about the upcoming election.

The Flash PMI, an early estimate of the final PMI numbers for the end of the month, showed a larger than forecast decline in economic activity. The composite PMI was expected to be 49.5 and printed at 48.2.

The market opened slightly higher today after yesterday’s rally on the heals of a new all-time high in US tech stocks. However, with the US market’s close in the red yesterday, market focus turns again to domestic concerns.

The French president Macron called a snap election for the two rounds of ballots on June 30 and July 7. Populist party leader Le Pen landed an impressive victory in the EU parliamentary elections and may well win the presidential race also.

Her national populist agenda may spook the market, although it’s unclear how her party’s economic policies would play out. The latest poll from June 20 showed that Le Pen’s National Rally party are well in the lead with 34% of support, and the far-left wing alliance is in second place with 29%.

Macron’s alliance Together would foster 22%, if Le Pen doesn’t manage an outright majority in parliament we may se Macron creating an alliance with the far-left wing camp. Either way, both outcomes don’t seem likely to be well accepted by the market.

The CAC is down 0.31% at the time of writing, and the US market may change that if we see another rally. However, the CAC has lost around 6% since the Le Pen sealed her victory in the EU elections. I believe the political concerns of the outcome at the two round election are likely to continue.