France’s CAC 40 index has weakened from its recent highs above 6,740 points, but it has stabilized above the current support level at 6,500 points. French President Emmanuel Macron unveiled a €30 billion investment plan last week that will help reindustrialize the country after the coronavirus crisis.
The goal of this plan is to make France less reliant on foreign imports and to support a variety of other sectors ranging from the nuclear industry, electric cars to agriculture, from space to biotechnology. The auto industry has been hit the hardest, and many big companies scaled back production of some of their largest, most profitable models because of the ongoing semiconductor shortage.
Some politicians were not happy after President Macrons announcement, while far-right leader Marine Le Pen added:
A few months before the end of his mandate, the outgoing president uses the money of the French people to burnish his electoral image with promises that only bind his successor.
France’s 2030 plan could already be available in 2022, according to president Macron, and it is important to say that the biggest part of the plan, €8 billion, is devoted to the energy transition. The details of the plan have not been published, but President Emmanuel Macron discussed building small nuclear reactors with efficient waste management systems.
The main reason behind this is that France presents nuclear energy as the best choice to switch to a greener energy model and tackle the recent spike in gas and electricity prices. The higher energy prices add to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery.
Investments in the energy sector will also focus on hydrogen (around €2 billion), while the plan also has a purpose to strengthen industrial supply chains to avoid shortages of key components. The supply chains crisis represents a serious issue for the global economy, and many countries are particularly vulnerable to shortages of key parts and raw materials.
The European Central Bank recently reported that exports from Eurozone would have been at least 7% higher in the first half of the year if not for supply bottlenecks. Despite this, French Finance Minister Bruno Le Maire expects the French economy to grow 6% this year.
6,500 points represent support
Data source: tradingview.com
CAC 40 index is losing its value at the beginning of the week, but it continues to trade above the 6,500 support level. Further turmoils should not be discounted, and if the price falls below 6,500 points, the next target could be around 6,300 or even 6,000.
Summary
French President Emmanuel Macron unveiled a €30 billion investment plan last week that will help reindustrialize the country after the coronavirus crisis. CAC 40 index is losing its value at the beginning of the week, and if the price falls below 6,500 points, the next target could be around 6,300 or even 6,000.
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