CAC 40 Rises 1.13% On German Fiscal Boost
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The CAC 40 rose 1.13% on Friday to close at 8,028, rebounding from the previous session’s losses as investors reacted positively to Germany’s plans for increased fiscal spending.
Chancellor-designate Friedrich Merz secured agreements with the Green Party and SPD to inject hundreds of billions into Germany’s defence sector and ageing infrastructure, signalling a significant shift in the country’s fiscal policy.
This development provided a much-needed boost to European markets, which have been under pressure from escalating trade tensions and geopolitical concerns.
The luxury sector was a standout performer, with L’Oréal surging 3.4% and Hermes rising 1.4%, buoyed by strong Q4 results from Brunello Cucinelli, which highlighted robust demand for high-end goods.
Thales, a defence stock, also supported the index, ripping 5.6% on optimism surrounding increased defence spending in Europe.
However, Kering plunged 10.7% after Gucci appointed Demna as its new artistic director, a move that raised concerns among investors about the brand’s future direction.
This sharp decline underscored the volatility in the luxury sector, where leadership changes can significantly impact market sentiment.
Despite the day’s gains, the broader market remained cautious due to escalating trade tensions and geopolitical risks.
President Trump’s threat to impose 200% tariffs on EU wine and doubts about a US-brokered ceasefire in Ukraine weighed on investor confidence.
These factors contributed to the CAC 40’s 2.1% weekly decline, its sharpest in months.
The agreement in Germany, which includes a €500 billion infrastructure fund and exemptions for defence spending from the country’s debt brake, marks a pivotal moment for European fiscal policy.
However, the market’s muted reaction to these developments reflects lingering concerns about the global economic outlook.
What’s your take—do you think the CAC 40 can sustain its recovery, or will trade tensions and geopolitical risks continue to weigh on the index? 🤔📈
