CAC 40 index continues to trade in a bull market, although France’s economy contracted 0.1% in the first quarter of 2021

France’s CAC 40 index continues to trade in a bull market supported by better than expected economic data in the Eurozone. CAC 40 index is currently trading less than twenty points below 6,500 resistance, and as long the CAC 40 is above 6,000 points, there is no risk of the positive trend reversal.

European shares advanced last week supported by encouraging data in Eurozone; May Consumer Confidence 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 all industry sectors should benefit from the economic recovery.

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The increasing vaccinations will help the economy to advance even more while the European Central Bank repeated ​that the monetary policy would remain “very accommodative” amid persistent low inflation. The negative news is that France’s economy contracted 0.1% in the first quarter of 2021, which shows that the country entered into recession, but traders didn’t care too much about this (this was expected).

France has a second consecutive quarter of contraction after the country’s economy shrank 1.5% in the final three months of 2020. The real disposable income of households fell by 1.0% in the first quarter, but France Finance Minister Bruno Le Maire said last week that he expects a growth forecast of 5% 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 have a strong growth in the upcoming months,” said France Finance Minister Bruno Le Maire.

COVID-19 has temporarily shuttered businesses in France, especially in the services sector, but Finance Minister said that the crisis was moving behind us. France Prime Minister Jean Castex also said that the third wave in France is behind us, but further turmoil should not be discounted despite this.

France’s CAC 40 index remains supported after President Macron pointed last week to a “second period of recovery” that would see investment accelerated, which helped lift investors’ mood.

Technical analysis: 6,500 points represent the current resistance level

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

Summary

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