2027 Budget and Record Rates: CAC 40 Turns Red, Banks in the Spotlight

The 2027 budget weighs on the Parisian mood

The session is unfolding against a backdrop of political and budgetary tension. The draft state and social security budgets for 2027 are being reviewed this Thursday in the Council of Ministers before being sent to a Parliament without a clear majority. The adoption of these texts is expected to be challenging, and Prime Minister Sébastien Lecornu has himself warned about the consequences of prolonged instability.
In the background, the cost of France's financing is reaching new heights. The yield on the ten-year bond hit 4.86%, compared to 4.81% the previous day, nearing the peak of 4.87% seen in 2008 after the subprime crisis. At the same time, the German rate fell to 3.58%, bringing the gap between Paris and Berlin to nearly 1.30 points, the highest since 2012. This environment largely explains the pressure on the Paris stock market.

A Broadly Downward Trend

The dispersion of the session illustrates a market under tension: only 7 CAC 40 stocks are advancing, compared to 32 that are declining and one remaining stable. The movement extends beyond French borders. By midday, the STOXX 600 is down 0.76%, while the FTSE 100 is retreating by 1.13%, and the DAX is limiting its decline to 0.35%. The previous day at the close of Wall Street, the S&P 500 had lost 0.25% and the Dow Jones 0.86%, while the Nasdaq 100 had gained 0.23%. The Nikkei 225, meanwhile, had soared by 3.3% at its closing at 07:30 Paris time.
Despite the decline in Paris, the retreat remains orderly, without panic but with a diffuse selling trend affecting all sectors.

Banks Decline, Sanofi Moves Against the Tide

The banking sector is witnessing the most significant declines amid tensions over French sovereign rates. Crédit Agricole drops 2.25%, BNP Paribas 2.22%, and Société Générale 2.17%. Economically sensitive stocks are also not spared: Accor falls 2.64%, despite Barclays maintaining an « overweight » rating, although the target price was slightly lowered to 54 euros. Saint-Gobain slides 2.49%.
On the upside, the pharmaceutical sector is considered a safe haven. Sanofi rises 1.09% after announcing the expansion of its collaboration with Regeneron to four new antibodies. The agreement, centered around Dupixent, includes an initial payment of one billion dollars from Sanofi to its partner, ending a previous dispute. CIC Market Solutions reaffirmed its buy recommendation with a target price of 92 euros.

STMicroelectronics gains 0.85%, while Euronext advances 0.63%, with Goldman Sachs raising its price target from 162 to 169 euros while maintaining a neutral rating. Orange adds 0.36%, following the announcement of its selection to deploy the TESTA-EIRIS backbone network for the public institutions of the European Union.