CAC 40 edges up 0.39% at close, boosted by Kering and weighed down by BNP Paribas

Kering and Tech Stocks Lead the Rally

The luxury group Kering emerged as the undisputed star of the session, soaring 4.83% to €324.50. This jump follows the announcement of selling its beauty division to L'Oréal for €4 billion, a strategic move praised by the markets that allows the group to refocus on its flagship brands. L'Oréal, the buyer of this division, also benefited from the deal with a 1.20% increase to €395.35, as investors view it as an opportunity to strengthen in the premium beauty segment.

The technology sector also shone, with STMicroelectronics taking the second spot in the rankings, gaining 4.59% to €25.96. This performance is part of a broader rebound of European semiconductors. Defense stocks continued their rise, with Thales advancing 3.71% to €254.50, supported by ongoing geopolitical tensions in Ukraine and the resurgence of conflict in Gaza, which drive demand for military equipment.

Safran followed suit with a 2.09% increase to €303.10. The aerospace sector also benefited from favorable conditions, with Airbus climbing 1.65% to €203.70 after finalizing a significant order of 30 A350 aircraft by Indian airline IndiGo. The automotive sector showed promising prospects with Stellantis rising 2.30% and Renault gaining 1.60%, while luxury heavyweights LVMH and Hermès consolidated their positions with respective gains of 1.06% and 1.23%.

BNP Paribas Plummets After Unfavorable US Verdict

Conversely, BNP Paribas experienced a significant market downturn, plummeting by 7.73% to 69.10 euros, marking it as the steepest drop in the index. This setback follows a particularly strict US court decision: a jury held France's leading bank responsible for contributing to the sustenance of Omar al-Bashir's brutal regime in Sudan, ordering the institution to pay more than 20 million dollars in damages to three plaintiffs. This case reignites concerns about compliance and legal risks facing major international banks and could pave the way for other lawsuits.

The shockwave spread across the entire French banking sector, already weakened by concerns over the state's financial health. Société Générale fell by 1.19% to 53 euros, while Crédit Agricole lost 0.82% to 16.36 euros. This distrust towards French banks arises at a time when S&P Global Ratings has just downgraded France's sovereign rating, adding another layer of uncertainty. Utility stocks also suffered, with Veolia Environnement dropping 1.30%, Orange down 1.22%, and Engie declining by 0.41%. Insurance group AXA was not spared, with a decline of 0.74%, reflecting the widespread caution among investors towards financial and regulated assets.

The shadow of France's downgrade looms over the markets

Beyond individual movements, the session was marked by the unexpected downgrade of France's credit rating by S&P Global Ratings, which lowered the country's rating from AA- to A+ on Friday. The agency justified this decision by citing increased risks weighing on budget consolidation and persistent uncertainty concerning public finances, despite the presentation of the 2026 budget proposal to Parliament.

This downgrade reflects growing concerns about the trajectory of French debt and the government's ability to implement necessary reforms. French bond yields slightly rebounded, with the 10-year OAT rising to 3.38% from a two-month low of 3.31% the previous week.

Investors are now anxiously awaiting Moody's review scheduled for October 24, where the outlook could shift from stable to negative. Despite this tense macroeconomic context, the CAC 40 managed to reach a new all-time high during the session, briefly hitting 8,239 points before slightly retracting by the end of the day. This resilience demonstrates the market's ability to separate corporate performance from the state's fiscal situation, although this dichotomy might not hold indefinitely if public finances continue to deteriorate.