CAC 40: Paris Stock Exchange Falls Under Pressure from Bond Yields

A Session Driven by Interest Rates

The mood is heavy this Thursday in European markets. Bond market tension is dominating discussions. In France, the spread between the 10-year OAT and the German Bund reached 134.4 basis points on October 7, a decade high, as the National Assembly began the committee examination of the first part of the 2027 budget bill. Investor distrust toward the French fiscal trajectory is increasing, with the 10-year OAT yield hovering around 4.9%.

Across the Atlantic, the setting is equally challenging. The minutes from the Federal Reserve meeting on September 15 and 16, released the previous day, confirm a restrictive stance: many members believe another tightening could be necessary by the end of the year. The 10-year Treasury yield reached about 5.36% on October 7, an unmatched peak since 2002. By the close of trading on Wednesday, October 7, on Wall Street, the S&P 500 had dipped 0.22%, the Nasdaq 100 0.21%, and the Dow Jones 0.66%.

Paris Market Deep in the Red

The dispersion alone indicates the session's direction: only 6 stocks in the CAC 40 were up by midday, while 34 were down and none were stable. The downward trend is therefore widespread, sparing hardly any stocks. In Europe, the mood is similarly grim: the DAX fell by 0.84% during the session, the STOXX 600 by 0.90%, and the FTSE 100 by 0.43%.

The few stocks managing to rise owe it to their own momentum. Capgemini posted the best performance of the index with a gain of 2.8% at 114 euros. TotalEnergies followed, up 1.72% to 76.72 euros, with the oil group benefiting from an increase in its price target by JP Morgan, from 83 to 85 euros, maintaining a neutral recommendation. Publicis Groupe (+0.69%), Dassault Systèmes (+0.28%), and Danone (+0.27%) rounded out the small group of gains.

Automobiles, Semiconductors, and Luxury at the Forefront

The decline is led by cyclical sectors and those exposed to the global economic climate. Stellantis was at the tail end with a drop of 3.78% to 3.97 euros. Semiconductors were also suffering, with STMicroelectronics losing 3.61% to 48.10 euros, while ArcelorMittal fell by 3.17% to 53.82 euros.

Luxury wasn't spared, with Kering losing 2.81% to 206.05 euros. Finally, Safran declined by 2.76% to 310.60 euros. The group had nevertheless communicated on October 6th: its subsidiary Safran Reosc announced that the completion of the 931 segments of the primary mirror of the Extremely Large Telescope is scheduled to be finished by the end of 2026 at its Poitiers site, on behalf of the European Southern Observatory. An industrial timeline that wasn't enough to shield the stock from the prevailing pressure.