FRA 40 – Daily Chart
The FRA 40 was trading near its record high last week and that is still in reach. Support stands below the 8,000 level for another correction.
The French index of leading stocks rallied with defense stocks after the country joined other nations in ramping up spending on military.
The United States has been backing away from military commitments to Europe and other nations are seeking to fill the void.
But a dip in the market came in recent days after the French central bank stated that growth will slow more than expected. France’s economy is now expected to slow moreover the next two years as trade tensions hurt demand for French exports, the bank wrote.
The euro zone’s second-largest economy is set to slow from 1.1% growth last year to 0.7% this year, lower than a previous forecast of 0.9%.
“Our projection takes into account the uncertain context created by tariff measures evoked by the Trump administration (other than tariff increases on China),” the central bank said.
If the threats led to real tariff increases, France could expect a smaller hit than some other EU nations as its exports are less exposed to the US market, the Bank of France said.
Meanwhile, French President Emmanuel Macron has been urging allies to invest only in European defense options and ignore US products. Alongside that, a French politician called for a return of the Statue of Liberty that was gifted to the country 138 years ago.
It is another sign that Europe is diverging from the US and despite a move toward peace with Ukraine and Russia, the Eurozone could be exposed in the future without support from one of the world’s most advanced militaries.
The French stock index continues to be elevated despite the slowing economy and continued upside may be hard to attain.
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