French stocks and bonds under pressure from unrest and yields
The CAC 40 fell 2.2% for the week as domestic unrest and rising bond yields weighed on French equities. The decline outpaced the German DAX, highlighting specific macroeconomic headwinds facing the French economy.
The French CAC 40 index fell 2.2% for the week and is down 4% year-to-date, driven by deteriorating financing conditions and domestic unrest. Key losers included Kering, Carrefour, Safran, Schneider Electric, and Stellantis. Carrefour issued a profit warning citing looting and unrest, while banks Societe Generale and BNP Paribas fell 6.7%. French bond yields rose above 5% for the week, reflecting higher growth and inflation expectations compared to the United States. Moody's concluded its review of France's credit rating without a downgrade, maintaining the current status. In contrast, the German DAX was down 1.7% for the week but remains up 2.1% year-to-date. The divergence between the two markets highlights the specific pressure on the French economy from rising interest rates and social instability, which is outperforming negative trends seen in other European markets.