The CAC 40 Drops 0.86% at Midday, Weighed Down by Michelin and Trade Tensions
The Paris Stock Exchange was in a marked decline this Tuesday, October 14, by midday, with the CAC 40 index dropping 0.86% to 7,872 points around 12:30 PM. This downturn is part of a gloomy European context, as investors are struggling to process the renewed trade tensions between China and the United States, who have imposed mutual port surcharges on shipping companies. On the domestic front, political uncertainty persists as Prime Minister Sébastien Lecornu is set to deliver his general policy statement in the afternoon under the threat of at least two motions of no confidence. Amid this anxious climate, the safe-haven gold has reached a new high of $4,179 per ounce.
Michelin Plummets After Stark Warning on Earnings Forecast
Michelin, the Clermont-based tire manufacturer, ranks as the worst performer on the CAC 40, plummeting 8.65% to 26.19 euros, marking the steepest decline on the Paris index. This severe setback follows a profit warning announcement. The company disclosed a sharper-than-expected deterioration of its business in North America, with sales volumes dropping 10% in the third quarter. This abrupt downturn forces Michelin to substantially revise its annual financial targets downward. Sector operating profit is now expected to be between 2.6 and 3 billion euros at constant exchange rates, compared to the previously forecasted more than 3.4 billion euros, representing a decrease of nearly 25% from the initial ambitions.
This setback highlights the mounting challenges in the North American automotive sector, which is contending with a slowdown in demand and high inventory levels at distributors. The scale of the revision also reflects the rapid worsening of market conditions across the Atlantic, catching the French group’s management off guard. Analysts are now questioning Michelin’s ability to turnaround in the fourth quarter and its outlook for 2026 in an uncertain global automotive environment.
Stellantis and Industrial Stocks in Turmoil
Beyond Michelin, the entire automotive and industrial sector is struggling this Tuesday. Stellantis is experiencing the second-largest drop in the CAC 40, falling 4.45% to 8.41 euros, continuing its downward spiral amidst a deep industry crisis. Suppliers and industrial companies are not spared: Schneider Electric declines 2.13% to 241.65 euros, Kering drops 2.12% to 297.30 euros, Bureau Veritas falls by 1.99% to 26.60 euros, while STMicroelectronics retreats 2.10% to 24.21 euros. ArcelorMittal also loses 1.83% to 32.71 euros amid US-China trade tensions.
Aerospace and defense stocks are also affected: Airbus drops 1.66% to 199 euros, Thales falls 1.61% to 250.90 euros, and Safran decreases 1.34% to 294.10 euros, despite Safran’s reassuring statements about its ability to produce enough engines for Airbus to meet its delivery targets this year. Legrand declines by 1.60% to 141.80 euros, Saint-Gobain drops 1.37% to 88.08 euros, and Renault slips 1.51% to 33.85 euros, highlighting the broad investor skepticism towards cyclical stocks in this deteriorating macroeconomic environment.
Defensive Stocks Hold Strong, Led by Danone and Publicis
In this widespread downturn, a few defensive stocks manage to stand out. Danone takes the lead with the largest increase in the CAC 40, gaining 1.15% to reach 75.58 euros, benefiting from its defensive nature in an anxious market environment. The food group was supported last Thursday by a positive note from JP Morgan, which anticipates solid performance for the entire year, banking on volume dynamics to support revenue. Orange also rises by 0.89% to 13.55 euros, while Carrefour gains 0.62% to 13.04 euros, with consumer staples acting as safe havens.
Publicis edges down slightly by 0.65% to 82.96 euros despite raising its annual organic growth target for the second time this year, now expected between 5% and 5.5% compared to the previous estimate of around 5%. This forecast is driven by strong client demand for products and services related to artificial intelligence. This performance highlights the current market dichotomy, where investors favor stocks that are less sensitive to economic cycles and capable of delivering predictable growth, to the detriment of more cyclical sectors exposed to geopolitical and commercial uncertainties.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
