CAC 40 Drops Further Despite Boost from L'Oréal; Kering and Safran Plunge

A Tense Session Amid Rates and Oil

The atmosphere is heavy on the European markets. The day before, the yield on the French 10-year OAT exceeded the 5% threshold for the first time since 2002, while the spread with the German Bund neared its peaks from the 2011 debt crisis. This high risk premium on French assets weighs on investor morale, especially as the budget calendar remains busy and an anticipated decision by Moody's on the sovereign rating fuels nervousness.

In the background, energy prices continue to rise. Brent crude climbed above $111 a barrel, supported by new tensions in the Middle East and reported incidents involving tankers near the Strait of Hormuz. The VIX volatility index jumped by 17.39%, indicating a resurgence of risk aversion. The previous day on Wall Street, the Nasdaq 100 dropped 2.9% at the close on Thursday, October 22, and the S&P 500 fell by 1.21%, while the Dow Jones ended almost flat.

L’Oréal leads the few gains, TotalEnergies benefits from oil

In this gloomy context, L'Oréal stands out as an exception. The stock jumped 4.88% to 433.15 euros, following the publication of quarterly sales of 11.56 billion euros, exceeding analyst consensus despite a decline in Latin America due to Mexico. BNP Paribas Exane raised its target price from 460 to 500 euros, reiterating its outperformance advice.

TotalEnergies benefits from firm crude prices, gaining 2.19% to 81.73 euros. Carrefour advances 1.24% to 13.86 euros, even after lowering its 2026 targets, impacted by the worsening social situation in France. EssilorLuxottica also progresses by 1.24%, supported by S&P's upgrade of its long-term credit rating to A+ with a stable outlook. Saint-Gobain completes the top performers, rising 1.17%.

Kering Falls, Safran and Luxury Weigh Down the Market

The downturn is concentrated on a few heavyweights. Kering plummets by 12.58% to 186.64 euros following stable quarterly revenue of 3.345 billion euros, showing a slight decline on a comparable basis. The drop in Gucci was offset by jewelry, but the penalty is severe: Goldman Sachs lowered its target from 250 to 230 euros, and Jefferies from 220 to 200 euros.

Safran falls by 7.88% to 278.20 euros. The equipment manufacturer reported third-quarter revenue of 9 billion euros, up by 14.7%, and confirmed its annual objectives, but the report shows a slowdown in the growth of civil aircraft engine spare parts, quarter after quarter.

The luxury sector remains under pressure: Hermès drops by 2.56% to 1,256.50 euros, after growth slowed to 4.3% in the third quarter. Berenberg downgraded its recommendation to hold, reducing its target to 1,230 euros. Accor loses 2.87% to 44.72 euros, despite a revenue increase of 9.8%, and STMicroelectronics falls by 2.31% in the wake of the tech downturn on Wall Street.