Shaken by a major political crisis in France, the flagship index of the Paris Stock Exchange, the CAC 40, ended the year with a slight decline and fell considerably behind the main financial centers around the world.
At the end of its last session of 2024, the CAC 40 posted a decline of 2.15% since January 1, an annual report in sharp contrast to the jump of more than 16% signed in 2023.
“This underperformance of the French market is unprecedented in the last 25 years compared to other European markets and compared to the United States,” reports Guillaume Laconi, European equities manager at Edmond de Rothschild AM.
For comparison, the main index of the Frankfurt Stock Exchange, the Dax, ended 2024 up 18.85% after flying from record to record. Same trend on the American S&P 500 index, which should end the year with an increase of more than 20%.
“The dissolution of the National Assembly slowed down any positive dynamic” and increased “uncertainty for investors,” comments Andrea Tueni, head of market activities at Saxo Bank.
Before this announcement on June 9, the CAC 40 showed an increase of more than 6% since January 1 and gradually gave up all these gains, before falling into negative territory during the week that followed.
A consolation prize for investors, listed French companies “only carry out 17% of their activity in France, in other words 83% of the activities of listed companies take place abroad”, specifies Guillaume Laconi.
– A slow market –
The CAC 40 had nevertheless broken its records during the session (8,259.19 points on May 10) and at the close (8,239.99 points on May 15) in the spring, but nevertheless advanced at a more modest pace than its counterparts.
“The underperformance between January and June is essentially due to specific elements in certain sectors and certain values,” explains Guillaume Laconi.
For example, in the pharmaceutical sector, the Danish Novo Nordisk was growing by more than 40% at that time; in comparison, the French Sanofi was in slight decline.
“We find the same phenomenon in the semiconductor sector: ASML jumped by more than 45% in the first months, where STMicroelectronics and Soitec declined significantly,” he continues.
Thus, the dissolution of the National Assembly came “at a time of slowdown in the French market” and “a third of the losses of the CAC 40 took place before” this deadline, specifies the manager of Edmond de Rothschild AM.
– The return of Trump –
“To all this was added the threat of new American customs duties on European imports, which could further hamper the growth of the already sluggish euro zone,” added the head of Saxo Bank.
American President-elect Donald Trump will take possession of the White House from January 20, but has already threatened to impose a 10 to 20% tax on European products entering the United States, a central protectionist measure in his trade policy.
Furthermore, Donald Trump has already promised customs duties of 25% against Canada and Mexico, two of the United States’ main trading partners, theoretically protected by a free trade agreement. He also threatened Beijing to significantly increase tariffs on goods from China, as the two countries vie for global technological dominance.
“Often, we choose a major subject each year, but 2024 had the particularity of having multiple themes,” notes Alexandre Baradez, head of market analysis at IG France.
Faced with headwinds, “the CAC 40 has certainly fallen, but it is not on the verge of collapse,” he concludes.
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