CAC 40 Drops 1.6% Mid-Session as Luxury Sector and Trump Influence Paris Market

A session dominated by risk aversion

The Paris Stock Exchange is weighed down by Donald Trump's tariff threats, creating a context that heavily impacts the Parisian market from the opening. Investors are adopting a distinctly defensive stance, as evidenced by market dispersion: by midday, only 4 stocks on the CAC 40 show gains, compared to 36 declining. Trading volumes remain low, reflecting operators' caution in a climate of heightened uncertainty. The Paris index therefore falls by 1.6%, trading at 8127 points around 12:30 PM, following a general tension across European markets. This downturn occurs while Wall Street is closed due to a holiday, depriving European investors of a usual benchmark.

Luxury Turns Into Nightmare as LVMH and Hermès Plunge

However, it is the luxury sector that primarily draws attention during this session. Kering plunges by 4.12% to 302.55 euros, dragging down other major players in the sector. LVMH falls by 2.67% to 627.20 euros, and Hermès drops 2.01% to 2099 euros. These three French giants are collectively facing a sharp correction due to concerns over their exposure to the American company Saks, which filed for bankruptcy last week. Their decline is having a mechanical impact on the entire index: these groups, which make up a significant portion of the CAC 40's market capitalization, are pulling Paris down with them. The sector, which had already shown signs of weakness in recent months amid slowing Chinese demand and global economic uncertainties, continues to suffer from a negative environment.
Renault is also contributing to the downward trend with a decline of 2.86%, as is STMicroelectronics, which plummets 4.85%, marking the largest drop in the index despite recent improvements in the semiconductor sector.

Thales Resists Against the Tide

Thales (+1.62% at 270.30 euros) is gaining attention amid heightened geopolitical tensions. The French defense industry leader stands out at the top of the Paris stock exchange ranking, benefiting from renewed investor interest in defense stocks in a tense international environment. Thales claimed the top spot on the leading index of the Paris market after reaffirming its 2025 annual forecasts. The defense giant confirmed this morning, following its fourth-quarter pre-closing conference call, that it still anticipates organic sales growth of 6 to 7% and a margin between 12.2 and 12.4%. Orange, Euronext, and Carrefour also show modest increases but remain largely overshadowed in a market predominantly trending downward.