The CAC 40 jumps nearly 2% driven by a strong banking rally amid the Middle East crisis

A Massive Rebound Despite Turmoil in the Middle East

Wednesday's Paris session is a paradox. While the ongoing military escalation in the Middle East continues to weigh on energy markets and sovereign debts, the Paris Stock Exchange is showing a strong rebound. The official entry into war by the Houthis, the deployment of additional US troops in the region, and persistent traffic disruptions in the Strait of Hormuz have formed a critical geopolitical backdrop since last weekend.

However, Iranian statements about allowing « non-hostile » ships to pass through the Strait of Hormuz seem to have been perceived as a potential sign of de-escalation. Similarly, Donald Trump mentioned a possible halt to hostilities within two to three weeks, which has helped calm the atmosphere, at least for now.

The divergence is telling: only four stocks in the CAC 40 are declining by midday, and just one is stable. The SBF 120 index follows the same trend, up 1.51% at 6,008.35 points. This rebound is particularly noteworthy given that the VIX remains anchored above 31 points, a level typically associated with significant market volatility.

Banks lead the charge while defense follows

The French banking sector is emerging as the major driver of the session. Société Générale leads the CAC 40, up 5.18% at 64.96 euros. BNP Paribas follows at 84.38 euros (+4.19%), while Crédit Agricole gains 3.39% at 16.47 euros. All three institutions are among the top five risers of the index.

This simultaneous and powerful banking rally occurs in a context where European bond markets are being disrupted by the repercussions of the conflict in the Middle East. Tensions over sovereign rates, linked to energy disruptions, are altering revenue prospects for banks, which are traditionally sensitive to the interest rate environment.

Another sector in focus is defense. Thales jumps 4.56% to 263.60 euros, amidst regional military escalation and increased Western presence in the Middle East. Meanwhile, ArcelorMittal, a player in steel and raw materials, rises 4.86% to 45.97 euros, rounding out the podium for the strongest gains.

EssilorLuxottica and TotalEnergies trail behind

In an almost unanimously bullish market, the few declines are concentrated in very different profiles. EssilorLuxottica registers the sharpest drop in the CAC 40, down 3.07% to 192.30 euros. The optical giant stands out as an exception in a session where almost all stocks are rising.

TotalEnergies falls 1.84% to 79.42 euros. The oil company operates under the direct pressure of uncertainties linked to the Strait of Hormuz and strikes on Iranian energy infrastructure. Disruptions of flows in this strategic chokepoint for global oil transport weigh on the sector's visibility.

Pernod Ricard slips slightly by 0.40% to 63.96 euros, Danone drops 0.14% to 68.94 euros, while Orange remains steady at 17.68 euros. These marginal movements confirm the absence of widespread selling pressure. In this early afternoon, the Paris Stock Exchange presents an image of a market that chooses to cling to signs of calm, however fragile, while staying vigilant.