Will 2024 be a good year for the CAC 40?

Significant increase in CAC 40

The CAC 40 is off to a flying start in 2024, with gains of nearly 8% in less than three months, outpacing Wall Street’s performance.. The surge is particularly fueled by the release of outstanding results from listed companies. Despite persistent inflation in the United States and the Eurozone, investors remain optimistic, with key rate cuts expected from the ECB and the Fed in the coming months.

In this economic landscape, certain macroeconomic data supports market optimism. Alexandre Baradez of IG France highlighted the resilience of the German economy, helped by falling gas prices and improving sentiment in the industrial sector in the eurozone. This set of factors suggests that the worst may be behind us, especially in terms of credit availability.

Factors Supporting Performance

The performance of the CAC 40 also reflects the global situation where despite challenges, signs of stability are emerging. The American economy, while slowing, is not weakening, supported by the resilience of the service sector. For its part, the Chinese economy is showing signs of stabilization, offering a glimmer of hope despite continued difficulties in the real estate sector.. This mixed global economic picture indirectly supports the CAC 40’s performance by boosting investor optimism.

Hidden geopolitical threats

However, the picture is not without clouds. Geopolitical tensions, particularly the trade war initiated by Donald Trump, the situation in Ukraine and tensions surrounding Taiwan, are all risk factors for the markets.. Lombard Odier asserts that the world has become “more bellicose”, raising indicators of geopolitical risk.

In addition, inflation remains a major concern. Lombard Odier estimates that there is a one in five chance that the US economy will enter stagflation or see a re-acceleration of inflation, which could limit the Fed’s ability to cut its key rates before 2025. This view is reinforced by high oil expectations. Prices, which can support inflation.

A question in the field of technology

The technology sector, a key driver of the uptick in the CAC 40, could also face adjustments. The outperformance of technology stocks, fueled by hopes linked to artificial intelligence and expectations of a cut in key rates, could be called into question. Lombard Audier warns of a possible readjustment of valuations if higher growth projections are not met or interest rates do not fall as expected.

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Outlook and caution

The landscape for the CAC 40 in 2024 is therefore complex, marked by signs of economic resilience and multiple risks, whether geopolitical, economic or sectoral. If investors’ optimism has been justified by recent performances, vigilance is required in the face of numerous challenges that could influence the trajectory of the Paris stock market in the coming months..