CAC 40 takes a breather after its all-time high, weighed down by L'Oréal and Hermès

Luxury giants face penalties despite strong results

The session's dynamics are largely dictated by the significant corrections experienced by two major companies listed on the Paris stock exchange. L'Oréal plummeted by 6.49% to 372.15 euros, marking the biggest decline on the index following the release of its results for the first nine months of the year. Despite a like-for-like growth of 3.4%, the cosmetics giant warned of the significant impact of unfavorable exchange rates, estimating a potential 3.8% loss in its annual revenue if the current exchange rates persist. This outlook, clouded by currency effects, has chilled investors, leading to a severe penalty on the stock.

Hermès is also not spared, dropping 3.87% to 2,163 euros, in a move that surprises given the apparent robustness of its fundamentals. The luxury goods maker recorded quarterly revenue of 3.88 billion euros, a 9.6% increase at constant exchange rates, driven notably by its leather goods segment with a 13.3% growth. However, a 7.2% slump in sales in its Perfumes and Beauty division, impacted by a high comparison base, cast a shadow over the overall performance. This dual setback underscores the heightened market expectations for French luxury giants, which must navigate a more uncertain global economic environment and increasingly selective consumers, particularly in Asia.

Industrial and Technology Sectors Weather the Storm

Amid the downturn of luxury stocks, the CAC 40 finds support from industrial and technological stocks. Schneider Electric leads the way with a remarkable gain of 3.14% to 257.60 euros, confirming investors' appetite for players in energy transition and industrial automation. Edenred progresses by 2.57% to 25.56 euros, continuing its surge from the previous day following the release of better-than-expected quarterly sales. The prepaid services specialist benefits from favorable business momentum that reassures its outlook.

Thales gains 2.27% to 261.50 euros, buoyed by sustained interest in defense stocks amid a tense geopolitical climate, highlighted by recent statements from US President Donald Trump. He expressed reluctance to meet with Vladimir Putin if it would prove futile, dampening hopes for de-escalation of the Ukrainian conflict. Legrand adds 1.53% to 149.25 euros, while ArcelorMittal rises 1.49% to 33.33 euros, indicating that cyclical stocks still attract buyers despite questions about the strength of global growth. Airbus advances 1.30% to 210.05 euros, Vinci climbs 1.03% to 122.10 euros, and Safran edges up 0.75% to 310.40 euros, demonstrating some resilience in aerospace and infrastructure-related stocks. This partial resilience of the industrial sector allows the CAC 40 to limit its losses and remain close to equilibrium halfway through the session.

A technical pullback following the previous day's euphoria

This pause in the CAC 40 is part of a consolidation strategy following a series of exceptional sessions. On Tuesday, the Paris index reached an all-time intraday high of 8,271.48 points and set a new closing record at 8,258.86 points, surpassing its previous records from May 2024, before the dissolution of the National Assembly. This remarkable performance was driven by a decline in political uncertainty in France, the easing of Sino-American trade tensions, and a generally favorable corporate earnings season.

However, the Paris index has lagged behind its European counterparts since the beginning of the year, with a gain of 12% compared to 22% for the German DAX, 36% for the Spanish IBEX, and 25% for the Italian MIB. The correction observed this Wednesday appears more as a technical profit-taking rather than a genuine trend reversal. Investors are digesting quarterly earnings in a climate marked by some geopolitical caution while staying attentive to upcoming macroeconomic indicators that will better assess the strength of the European economic recovery. The divergent behavior between sectors reflects an ongoing sector rotation, with investors favoring industrial and technology stocks over luxury, which is temporarily penalized by more cautious forecasts.