The CAC 40 continues to struggle overall, as the fiscal problems in France are overwhelming everything, except perhaps oil costs.
CAC 40
The Parisian index has fallen below the €7,800 level during the trading session here on Wednesday, as it looks like we are falling apart.
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It is worth noting that the 10-year yield in France is now threatening 4.88%. This is a reversal of the attempted recovery during the trading session. As markets continue to see a lot of concerns about French bonds, the 10-year yield reaching as high as it has is concerning. Then you have the spread between French and German debt at roughly 1.4% on the 10-year yield. That is a big deal. The widening spread between France and Germany shows this is a local story more than anything else.
Energy is a factor as well
Oil is rising again, and that puts a little bit of pressure on European equities in general. But with France's concerns about debt, that becomes a big deal. Industrials and technology are both participating in this sell-off, with Legrand and Société Générale among some of the bigger losers. There are also other major companies out there sliding as well.
The €7,600 level is an area that traders would be watching closely, as it was a swing low in the middle of March. So, we will see if that holds. But really, what we are going to need is some type of help with the French 10-year yields. That could give other reasons for the market to bounce.
I do think this eventually ends up being a value play, but right now, it just looks so sickly. Middle East energy headlines continue to be a problem, right along with those French budget developments, which so far look like they are going to struggle to get through Parliament.
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