The Paris Bourse was largely unaffected by the outbreak of war on the outskirts of Europe. On the other hand, the trade conflict with China and the political risks arising from the Western elections weighed directly on companies’ prospects.
Who remembers? On May 10, the CAC 40 index peaked at 8259.19 points. A month later, in France, the result of the European elections was followed by the first political earthquake: the dissolution of the National Assembly and the hung chamber that would emerge from the early legislative elections in July.
After a difficult summer, a double whammy in autumn
More fear than harm for the markets after all? At the summer low, the CAC 40 tried to stabilize at around 7,600 points. At the beginning of August, the combination of the carry trade and, in the United States, fears of recession and doubts about the Fed’s policy, sent the CAC plunging towards 7000 points. After the half-year results, and with the campaign of Democratic candidate Kamala Harris paying off across the Atlantic, the index returned to 7800 points at the end of September.
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That’s when in Paris, the Finance Bill presented includes a long catalog of tax hikes targeting corporations. And in the United States, Republican Donald Trump, who makes no secret of his protectionist stance at a time when Europe’s economy is largely dependent on trade, takes the ascendancy. Let’s not forget the trade wars between China, the USA and also the EU, and that in Germany, the government of Europe’s leading economy is under threat. All these political shocks contributed to the CAC 40 dropping to 7,200 points.
A risk on top of all others
Does this mean that the Paris Bourse is retreating under the sole pressure of political risk? Obviously not: in fact, the CAC 40 began to lose its lead over the other European indices in April, when the sharp slowdown in the luxury goods sector, which is important in Paris, was confirmed. And still in Europe, the warnings seem to have been far more numerous in Q3 than in H1. But these are exogenous events which have undoubtedly increased the negative pressure on the Paris Bourse.
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A heavy stock market penalty for JCDecaux despite double-digit growth
What’s next? It’s impossible to predict exactly what President Trump’s policies will be, or even, closer to home, the future of the Barnier government. Fortunately, there are still public authorities on whom the markets can rely: the central banks, which continue to lower their key rates. The Fed did so last week, and the ECB may do so again on December 12.