Freaky Dip: France's CAC 40 Sputters - Politics and Stock Market Tangles
The Political Cha-Cha Has Investors Turning Away from the French Stock Market - CAC 40's Composition Takes a Toll
Pessimistic forecast for French stocks
A host of uncertain factors have been pushing investors to steer clear of the French stock market since the previous year, with the tumultuous political climate kicked off by the early parliamentary elections in June as a major culprit. Despite a little ray of hope, a speedy turnaround doesn't seem imminent.
City of Lights
Paris
By Spliced Silk, Paris
The CAC 40 took quite a dive at the start of the new year, following a subpar performance in 2025. France's benchmark index ended the ill-fated year with a loss of 2.15%, marking it as the only major stock market index to do so. On the contrary, the Dax soared nearly 19%, the Nikkei 20%, and the Nasdaq Composite raced ahead to nearly 30%. Sadly, the CAC 40 also notched the worst performance within a calendar year since the Euro crisis. On the first trading day of 2026, it dipped further. Analysts don't envision a swift recovery.
Macroeconomic, Sector-specific, and Technical Factors Jingle All the Way to CAC 40's Downturn
- Wallets tighten due to monetary policy anxiety - Enthusiasm cools over the ECB's April 2025 policy declaration, causing the index to lose 0.52% intraday, plummeting to 7,291.50[1].
- Bearish technical bells and whistles - By early April, the index slid to 6,990.56 (below all major moving averages), with an MACD of -213.30 signaling a bear run[5]. The RSI at 22.01 suggested an oversold market, though a prompt comeback didn't take place[5].
- Corporate earnings blues -
- Pernod Ricard faced a 3% Q3 sales decline (€2.278B) and a 5% nine-month drop[1].
- Hermès, though seeing a 0.8% revenue increase, fell short of luxury sector expectations, leading to a palpable wave of skepticism[1].
Comparable Index Performance - A Standoff Between Fortunes
| Region | Index | April 2025 Highlights ||--------------|------------|-------------------------------------------------------------------------------------------|| France | CAC 40 | Oversold (RSI 22.01), significant MACD divergence (-213.30), below all moving averages[5] || UK | FTSE 100 | Closed at 7,823.32 (+1.57%) with an improving MACD (-161.86), proving its resilience[5] || Europe | Broad | Gave up year-to-date gains by April, thanks to the decline of sovereign yields and risk aversion[4]|| US | Major Indices | Faltered nearly 15% by early April amid tightening credit conditions[4] |
Seemingly impervious to these issues, the FTSE 100 demonstrated a modicum of resilience, yet both European and U.S. markets battled synchronized challenges, with the CAC 40 dealing with local corporate underperformance and severe technical selling pressure[1][4][5].
- The political turmoil in France, highlighted by the early parliamentary elections in June, has led to a decrease in investor interest in the French stock market since the previous year, with the CAC 40 being a significant casualty.
- In the first trading day of 2026, the CAC 40 dipped further, continuing its struggle from the previous year.
- In April 2025, the CAC 40 lost 0.52% intraday and plummeted to 7,291.50, following the European Central Bank's policy declaration that caused monetary policy anxiety among investors.
- By early April 2025, the CAC 40 slid to 6,990.56, which was below all major moving averages, and the MACD of -213.30 signaled a bear run, indicating a prolonged period of declining prices.
- Some of the major companies listed on the CAC 40, such as Pernod Ricard and Hermès, faced challenges in their corporate earnings, contributing to the overall downturn of the index.
