Paris Stock Exchange: CAC 40 Stagnant as Middle East Situation Worsens

A Market Paralyzed by Fear and Caution

The CAC 40 stands at 7,702.15 points, appearing perfectly stable but underpinned by opposing forces. Of the 40 stocks in the index, 21 are falling, 18 are rising, and just one remains unchanged. The SBF 120 slips slightly, down 0.02%. The VIX volatility index jumps 8.33% to 27.44 points, indicating high tension in global markets.

The entire session is dominated by the Middle East crisis. The entry of the Iran-backed Houthis into the conflict marked a new phase of regional instability over the weekend. Additional US troops could be deployed in the area, raising fears of an expanded conflict. Strikes on Iranian energy infrastructure and disruptions around the Strait of Hormuz—a strategic chokepoint for global oil transport—are driving an energy price shock that observers consider neither marginal nor quickly reversible.

In France, Prime Minister Sébastien Lecornu commented on Iranian statements regarding the potential passage of « non-hostile » ships through the strait, seeing it as a possible « sign of a phase change in this crisis, » while calling for vigilance. The risk of a global production crisis remains a central concern. In this context, the Paris market fluctuates with geopolitical dispatches, without a clear direction.

Defense and energy lead the gains

The defense sector is standing out in this martial atmosphere. Thales is leading the CAC 40 at midday with a surge of 2.77% to 244.50 euros. The defense electronics company is directly benefiting from the renewed international tensions and the Western military deployments.

Energy-related stocks are following suit. Engie is up by 2.20% to 27.42 euros. TotalEnergies is gaining 1.96% to 80.03 euros, supported by the rise in crude oil prices caused by disruptions in the Strait of Hormuz. The oil company is benefiting from the energy price surge that accompanies this crisis.

Elsewhere, everyday defensive stocks are holding steady. Danone is advancing by 1.85% to 68.40 euros, while Pernod Ricard is up 1.11% to 65.42 euros. This is a classic pattern of shifting towards stocks considered less vulnerable to economic fluctuations.

Banks, luxury, and pharma in the red

The downside hits the banking sector hard. Société Générale posts the largest drop in the index, down 2.60% to 60.66 euros, followed by BNP Paribas, declining 1.43% to 79.92 euros. The disruptions in the European bond markets, directly linked to the Middle Eastern energy shock, weigh on financial stocks.

Sanofi falls 2.44% to 79.99 euros, despite positive phase 3 results for amlitelimab, its new treatment for atopic dermatitis, presented Friday at the American Academy of Dermatology conference in Denver. The stock is also hit by a reduction in the price target from 98 to 94 euros by LP, which nevertheless maintains its outperform recommendation.

In the luxury sector, Hermès drops 1.02% to 1,605 euros. The stock faces two downward target revisions this Monday: HSBC lowers its target from 2,350 to 2,300 euros, while UBS makes a more pronounced adjustment from 2,310 to 1,820 euros. Lastly, Accor slides 1.34% to 39.89 euros, as Barclays reduces its target from 55 to 53 euros for the hotel group's stock.

Midday, the Paris Stock Exchange illustrates a typical session of geopolitical crisis: an index that appears calm on the surface, but with violent sectoral moves underneath, driven by one overriding factor—war.