A remarkable rise in the CAC 40
The CAC 40 is off to a flying start in 2024, with an increase of almost 8% in less than three months, even surpassing the performance of Wall Street. This surge is fueled in particular by excellent results publications from listed companies. Despite persistent inflation in the United States and the Eurozone, investors remain optimistic, anticipating a reduction in key rates from the ECB and the Fed in the coming months.
In this economic landscape, certain macroeconomic data support market optimism. Alexandre Baradez, from IG France, highlights the resilience of the German economy, helped by falling gas prices, and an improvement in sentiment in the industrial sector in the eurozone. This set of factors suggests that the worst may be behind us, particularly in terms of credit availability.
Factors supporting performance
The performance of the CAC 40 also reflects a global situation where, despite challenges, signs of stabilization are emerging. The American economy, although slowing, is not weakening, supported by the resilience of the services sector. For its part, the Chinese economy is showing signs of stabilization, offering a glimmer of hope despite persistent difficulties in the real estate sector. This mixed global economic picture indirectly supports the performance of the CAC 40, by fueling investor optimism.
Latent geopolitical risks
However, the picture is not without clouds. Geopolitical tensions, notably the trade war initiated by Donald Trump, the situation in Ukraine, and tensions around Taiwan, are all risk factors for the markets. Lombard Odier emphasizes that the world has become “more bellicose”, which increases indicators of geopolitical risk.
Additionally, inflation remains a major concern. Lombard Odier estimates that there is a one in five chance that the US economy will enter stagflation or see a re-acceleration of inflation, which could limit the Fed’s ability to lower its key rates before 2025. This outlook is reinforced by expectations of higher oil prices, which could support inflation.
The question of the technology sector
The technology sector, a significant driver of the rise in the CAC 40, could also face adjustments. The outperformance of technology stocks, fueled by hopes linked to artificial intelligence and expectations of a reduction in key rates, could be called into question. Lombard Odier warns of potential readjustment of valuations if high growth estimates are not met or interest rates do not fall as expected.
Outlook and caution
The landscape for the CAC 40 in 2024 is therefore complex, marked both by signs of economic resilience and by multiple risks, whether geopolitical, economic or sectoral. If investors’ optimism has been justified by recent performances, vigilance remains required in the face of the numerous challenges which could influence the trajectory of the Paris stock market in the months to come.