CAC 40 under pressure: Why France falls back in the stock market comparison

CAC 40 under pressure: Why France falls back in the stock market comparison

Peine, Deutschland - What about the performance of the CAC 40? The Paris Index lags behind its European counterparts and has only seen a modest increase of 6%since the beginning of 2025. The big indices in Europe are completely different: Dax 40 in Frankfurt rose by 22%, the IBEX 35 in Madrid by 20.8%, the FTSE MIB in Milan by 17.2% and the FTSE 100 in London by 9.4% [ tradingsat.com ]. The nervousness in the markets is noticeable, not least because of political uncertainties in France after the dissolution of the National Assembly in June 2024.

Numbers do not lie: Wall Street has now overtaken the Paris market, and the S&P 500 (+6.4%) and the Nasdaq Composite (+6.8%) are also ahead [ Boursorama.com ]. The reasons for the weak performance of the CAC 40 are versatile. In the luxury segment, which is about 30% of market capitalization, there are problems: the sector is under pressure with companies such as LVMH and Kering, which has dropped by 23.2% or 17%. However, analysts are optimistic about a possible stabilization of the Chinese economy that is considered an important sales market.

political chaos and uncertainties

The political situation in France looks like a block on the leg. The current decline of the CAC 40 of almost 10% since the government crisis under President Emmanuel Macron has shown how much the stock markets suffer from political chaos [ nzz.ch ]. Prime Minister Michel Barnier could not bring a budget through the parliament, which resulted in the resignation of his government. In this situation, a political vacuum could bring stability at short notice, since the parliament does not discover a large scope for action until possible new elections in summer.

Especially in the financial world, the views of the French government bonds are focused. The spread between the 10-year government bonds of France and Germany is around 70 basis points, a sign of continuing concerns on the market. Public debt is estimated to be 5.6% of GDP for 2025, so comparatively high compared to other European countries [ tradingsat.com ].

Future view and market developments

Despite the dark views, there are a spark of hope in some circles. Analysts believe that the problems in the luxury segment (so dependent on China) could improve in the long term. The French stock market could perhaps stabilize if the economic situation of the Asians improves, which could get the luxury wedge rolling [ NZZ.CH ].

Although French banks are under pressure at the moment because they are strongly invested in government bonds, the political risk of many market observers is considered already "priced in". This could make the CAC 40 appear attractive in the long run. The prospects for French government bonds are also better, especially since large rating agencies confirm good quality.

In total, the situation on the stock market in France looks anything but rosy. With cautious growth and an unstable political climate, the CAC 40 is an index that many investors are skeptical about. It remains to be seen whether stabilizing the market is imminent.