This week, the CAC 40 experienced a 1% decline amid inflation concerns and market challenges, including rising energy prices and U.S. economic indicators. The Federal Reserve’s stagnating inflation metric suggests a cautious approach to interest rates, particularly with potential political shifts. Despite pressures on luxury stocks and broader economic issues in the eurozone, the CAC 40 has outperformed U.S. indices recently. Daily analyses include insights on various companies and the Nasdaq 100, encouraging subscriptions for ongoing updates.
The Current State of the CAC 40
This week, the CAC 40 faced challenges, slipping by 1% (as of the latest update) from one Friday to the next amid a backdrop of market headwinds. Concerns surrounding inflation and the corresponding actions of the Federal Reserve have added to the unease. The trend of disinflation that has been evident in recent years appears to have plateaued in the United States. In addition, rising energy prices, particularly oil and natural gas, are amplifying inflation concerns. Factors such as an impending cold wave in the U.S., anticipated stimulus measures from China, and disruptions in Russian gas supplies through Ukraine are contributing to this scenario.
Inflation Concerns and Economic Growth
The Federal Reserve’s preferred inflation metric, which excludes volatile categories like food and energy, has stagnated over the last year. Moving forward, the Fed may adopt a more cautious stance regarding potential interest rate reductions, especially if Donald Trump proceeds with his economic agenda during a potential second term. Many of the proposed measures, such as significant tax cuts, deregulation, and tariffs, are likely to exert inflationary pressure. Meanwhile, the eurozone is grappling with weakened economic growth, which is offset by inflationary tendencies driven by the euro’s depreciation, increasing the cost of imports.
The CAC 40 may feel the impact if Wall Street experiences a downturn. Since Christmas, the index has shown resilience despite political uncertainties in France and disappointing economic indicators, such as a notable decline in industrial performance and strained exports. Luxury stocks like LVMH, Hermès, and Kering have also faced pressures tied to uncertainties in the Chinese market, which reported underwhelming statistics this week. Notably, during this period, the CAC 40 has outperformed Wall Street, where the Nasdaq and Dow Jones have faced steeper declines.
In the United States, the stock market seems to be anticipating numerous positive developments, with the Nasdaq and S&P 500 enjoying significant gains in 2023 and 2024. Last year alone, the total value of American stocks surged by over $7 trillion, a remarkable increase. According to Pictet Asset Management, a firm based in Geneva, this rapid ascent raises valid questions about the sustainability of American stock performance, especially given that many companies are reaching historically high valuation levels based on comprehensive analyses.
This week, as part of our daily analyses on the CAC 40, we also explored the outlook for various listed companies, both in Paris and on Wall Street, assessing bullish and bearish scenarios for firms such as Esso, Engie, GTT, Capgemini, Sanofi, Icade, STMicroelectronics, Worldline, and Opmobility, along with tech giants like Amazon. Additionally, we evaluated the potential of the Nasdaq 100, the leading index for technology and growth stocks in the U.S. Stay updated with our daily forecasts on the CAC 40 and other listed companies by subscribing to Momentum. With an annual subscription, you can enjoy five complimentary months. Click the link provided earlier to take advantage of this offer.