CAC 40: LVMH, Hermès, Kering and Airbus in the spotlight

In brief

• The CAC 40 index is stabilising around 8,337 points after reaching a recent peak of 8,561 points.
• The three luxury giants LVMH, Kering and Hermès are publishing their results following stock market declines of 29% to 32%.

• Airbus is targeting a forecast revenue of 20.2 billion euros, driven by 154 new orders at Farnborough.
• Société Générale approaches its results bolstered by a share price that has risen to 76.37 euros and a capitalisation of 64 billion dollars.

The CAC 40 stock index reacts to financial publications from key companies

The CAC 40 in a consolidation phase

The CAC 40 stock index reacts to financial publications from key companies and monetary decisions by the European Central Bank. The Parisian index stands at 8,337 points in a phase of strategic pause before the publication of quarterly accounts from the market’s heavyweights. This consolidation period remains suspended on announcements from major groups such as LVMH, Kering, Hermès, Airbus, Société Générale, Schneider Electric, Sanofi and L’Oréal. After reaching a recent peak of 8,561 points, the Parisian market is pausing to observe, illustrating the legitimate caution of institutional investors in the face of global macroeconomic challenges.

The trajectory of the Paris Stock Exchange remains closely linked to the monetary policy pursued in the eurozone. Interest rate adjustments decided by the European Central Bank directly influence the cost of capital for listed companies, credit conditions granted to households and the overall valuation level of equities. In this fluctuating environment, the ability of major French groups to preserve their operating margins and generate robust free cash flows becomes the predominant criterion for arbitrage. The current session reflects a sector rebalancing where cyclical and defensive stocks cross paths according to analysts’ expectations.

Luxury giants under the market spotlight

Luxury and watchmaking under high tension

The luxury and high-end watchmaking sector is at the centre of investor attention. The expected publications follow the solid performance presented by the Richemont group, parent company of Cartier, whose share price has approached its historic highs, as well as positive indicators revealed by the specialist retailer Watches of Switzerland. LVMH opens the sector’s publication sequence, followed by Kering and Hermès International. The challenge lies in the ability of the maisons to confirm the sustainability of their growth.

These financial appointments come after several months of technical correction in high-end creation stocks. The Kering group’s share price has fallen by 32% from its annual peak, while LVMH has declined by more than 30% and Hermès International by 29%. The trajectory of sales in Asian markets, particularly in China, Japan and South Korea, as well as in the United States, is the main catalyst for a rebound across the sector. The sensitivity of these major geographical areas to variations in purchasing power, currency movements and the recovery of international tourism dictates the pace of global demand.

The luxury industry represents a significant share of the CAC 40’s weight. A marked variation in LVMH, Kering or Hermès shares immediately has a direct impact on the entire Parisian index. While prestige watchmaking maintains strong momentum driven by renowned maisons such as Cartier within Richemont, leather goods, luxury ready-to-wear and high-end cosmetics are undergoing a phase of normalisation in activity after the euphoria observed in previous financial years. Markets are watching with particular attention the resilience of ultra-premium brands in the face of a more aspirational clientele.

Stock market recovery and order book for Airbus

Airbus and aeronautics on the rise

Aeronautics constitutes the second major area of observation for investors with the presentation of Airbus’s results. The European manufacturer is taking stock of the Farnborough Airshow, during which Airbus secured 154 firm orders and commitments, compared to 173 contracts for the American group Boeing. The aircraft manufacturer’s share price is recording a sustained recovery of nearly 30% from its lowest point of the year.

On an operational level, the market anticipates solid financial results for the industrial giant. Airbus’s consolidated revenue is expected to reach 20.2 billion euros, supported to the tune of 15.2 billion euros by commercial aviation. The Helicopters division targets 2.1 billion euros, the Defence & Space branch 3.31 billion euros, and net profit is expected to rise above 1.58 billion euros. The monitoring of supply chains and the roll-out of the 5 billion euro share buyback programme remain scrupulously analysed by the financial community.

The global battle for control of the industrial skies is directly reflected in commercial order books. At the British aviation event in Farnborough, the classic duel between the European Airbus and its historic American rival Boeing once again illustrated the intensity of global competition. While Boeing slightly leads Airbus in terms of net contracts at this specific show with 173 commitments against 154, the overall order book of the Toulouse-based group offers production visibility extending over several years. Subcontractors and the entire aeronautical value chain are watching the ramp-up of assembly plants with an absolute requirement for punctuality and safety.

Favourable banking dynamics for Société Générale

French banks in full recovery

The French banking sector shows a clear recovery in valuations since the beginning of the year. Société Générale’s share price rose from 59 euros in March to 76.37 euros, bringing the financial group’s market capitalisation to 64 billion dollars. This annual financial event comes at a favourable time for European and North American banking institutions.

Signals from direct competitors confirm the favourable direction of the financial services sector. BNP Paribas’s net profit increased by a third to 4.3 billion euros, driven by the performance of market activities and revenue up 12% to 14.1 billion euros. The results published by UniCredit also confirm the strength of banking revenues on the European continent.

The banking sector is benefiting from the restructuring of its asset portfolios and adaptation to the credit conditions established by central banks. The upward trajectory of Société Générale, rising from 59 euros to 76.37 euros, reflects a marked recovery in investor confidence in leading credit institutions. For its part, BNP Paribas’s performance, materialised by a jump in its net profit to 4.3 billion euros and an overall increase in its market activities, illustrates the effectiveness of universal banking models in the face of global market developments.

Healthcare, industry and cosmetics: the strength of diversification

Beyond luxury, aeronautics and banking, the structure of the Paris Stock Exchange relies on marked sector diversification. The healthcare sector, represented by Sanofi, offers investment portfolios an essential defensive component in times of uncertainty over global growth. Similarly, advances in energy management and digital transformation, driven by Schneider Electric and Capgemini, reflect the structural shifts in the European economy towards the energy transition and the digitisation of industrial processes.

L’Oréal completes this ensemble, illustrating the power of the French cosmetics industry on an international scale. The complementarity between these global leaders ensures a balance for the Parisian index in the face of regional economic shocks. Regular monitoring of these publications makes it possible to appreciate the innovation capacity of these groups and their ability to preserve their margins in the face of rising production and distribution costs.

A decisive wave of publications for the Parisian market

The overall trajectory of the CAC 40 will also depend on the results of other major industrial and consumer companies. Publications from Schneider Electric, Sanofi, Capgemini and L’Oréal will complete the financial picture of the Paris market. These simultaneous announcements will make it possible to measure the resilience of the French economy and the profitability of major exporting groups in the face of international trade constraints.

The coming weeks therefore promise to be decisive in establishing the direction of the Parisian market before starting the closing of the annual financial years. Analysts will carefully scrutinise not only the compliance of the presented results with established consensus, but also the outlook formulated by executives for the quarters ahead. The strength of balance sheets, control of financial debt and the maintenance of attractive dividend policies will be key factors in supporting the CAC 40 above its current expectations.

Further reading

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