Top 4 catalysts for the blue-chip CAC 40 Index this week

The CAC 40 Index bounced back last week, even as a major rating agency downgraded the company’s outlook. It jumped to a high of €8,225, up from the year-to-date low of €6,762. This article explores some of the top catalysts that will move the index this week.

Top corporate earnings to impact the CAC 40 Index 

The CAX 40 Index rose last week after the strong earnings be LVMH, the biggest constituent company and the parent company of Tiffany, Fendi, and Christian Dior. Its revenue rose by 1% in the third quarter as it returned to growth following two quarters of negative growth.

LVMH stock jumped by 12% after the report, helping to boost the performance of other companies in the luxury goods industry like Hermès, Kering, and Burberry. Essilor, the biggest company in the eye industry, also published strong financial results last week.

The CAC 40 Index will react to earnings from some of the top constituent companies. Luxury brands companies like Kering and Hermès will publish their financial results on Wednesday.

The other top CAC 40 Index companies to release their earnings this week are Dassault Systemes, Orange, Renault, and Sanofi. Other companies like Airbus Paribas and Airbus will release their numbers in the following week.

Potential sale of Kering’s  beauty unit to L’Oréal 

The other notable catalyst for the CAC 40 Index will be rumors of corporate activity in France. According to Bloomberg, Kering, the parent company of Gucci, is considering selling its beauty business to  L’Oréal for about €4 billion. That will be the biggest deal in France this year  

The deal’s goal will be to turn around one of the biggest fallen angels in France, which has struggled in the past few years amid slowing Gucci sales. It will be the first turnaround efforts implemented by Luca de Meo, who became CEO last month.

Kering entered the beauty industry in 2023 with a €3.5 billion acquisition of Creed, a company that makes colognes. By selling this business, de Meo hopes to refocus the company on its core brands.

France politics after the downgrade 

The other notable catalyst for the CAC 40 Index this week will be France’s politics and the budget process.

Last week, the index rose after the country’s prime minister, Sebastian Lecornu, survived two no-confidence motions in parliament after he committed to suspend a law to boost the retirement age until after the presidential election in 2027.

Lecornu then submitted the draft budget to parliament, which will start to debate it. Still, despite this, S&P Global downgraded the French economy by one notch to A+/A-1 from AA-/A-1+. The agency said: 

"Additional risks to our growth forecast are considerable, particularly given the possibility of a pass-through of higher government borrowing costs into the cost of financing for the rest of the French economy.”

The credit rating downgrade explains why French bond yields rose on Friday. The 10-year rose to 3.36%, up from 3.30%. It remains much lower than the year-to-date high of 3.630%.

US corporate earnings 

The CAC 40 Index also jumped after the US earnings started, with most companies publishing strong results. The only issue came from some regional banks, which reported losses linked to fraud.

More notable companies will publish their earnings this week. The most notable one will be giants like Netflix, General Electric, Coca-Cola, Tesla, IBM, Thermo Fisher, Lam Research, Intel, and BlackStone. 

While these are all American companies, chances are that their performance will impact those in France and other countries.