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Home›French Economy›The CAC 40 index continues to trade in a bull market, even though the French economy contracted by 0.1% in the first quarter of 2021

The CAC 40 index continues to trade in a bull market, even though the French economy contracted by 0.1% in the first quarter of 2021

By Lisa Perez
May 30, 2021
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The French CAC 40 index continues to trade in a bull market supported by better-than-expected economic data in the euro zone. The CAC 40 index is currently trading less than twenty points below the resistance of 6,500, and as long as the CAC 40 is above 6,000 points, there is no risk of a positive trend reversal.

European equities rose last week, supported by encouraging data in the Eurozone; Consumer confidence for May improved as expected from -8.1 to -6.1, while the economic sentiment indicator jumped to 114.5. It seems that the worst has been avoided and that all industrial sectors stand to benefit from the economic recovery.

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The increasing vaccinations will help the economy grow even further as the European Central Bank reiterated that monetary policy will remain “very accommodating” amid low and persistent inflation. The bad news is that the French economy contracted 0.1% in the first quarter of 2021, which shows that the country has entered a recession, but traders didn’t care (that was expected).

France is experiencing a second consecutive quarter of contraction after the country’s economy shrank 1.5% in the last three months of 2020. Real disposable household income fell 1.0% in the first quarter, but French Finance Minister Bruno Le Maire said last week he expects a 5% growth forecast for 2021.

“The French economy will return to its pre-COVID 19 levels of economic activity by the first half of 2022, and I think we will experience strong growth in the coming months,” said French Finance Minister Bruno The mayor.

COVID-19 has temporarily shut down businesses in France, especially in the service sector, but the finance minister said the crisis was unfolding behind us. French Prime Minister Jean Castex also said the third wave in France is behind us, but further turmoil should not be overlooked despite this.

The French CAC 40 index remains strong after President Macron last week underlined a “second period of recovery” that would see investments accelerate, which has helped uplift investor sentiment.

Technical analysis: 6500 points represent the current resistance level

Data source: tradingview.com

The CAC 40 index continues to trade in a bull market, and if the price goes above 6,500 points, the next target could be around 6,600 or even 6,700 points. On the other hand, if the price drops below 6,000 points, that would be a firm “sell” signal, and the next target could be around 5,500 points.

summary

The CAC 40 index continues to trade in a bull market even though the French economy contracted 0.1% in the first quarter of 2021. French Finance Minister Bruno Le Maire said last week that he was expecting a 5% growth forecast for 2021, and the crisis was moving behind us.

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