The CAC 40 Below 6900 Points: Geopolitical Tensions Weigh Heavily On The Market

The stock market? A real headache. Between plunges and rebounds, the general impression is that of a stormy wind, a calm before another gust, or perhaps a calm illusion. In any case, no one is hiding behind the reasons for this volatility: inflation, geopolitical tensions, trade war. All these elements combined have turned the beginning of the year into a true obstacle course. And the CAC 40, in particular, faced a new trial marked by a drop below 6900 points.

Dive of the CAC 40: A drop below 6900 points after a black week

The last black week for the stock markets, which recently erased 3,250 billion dollars , was marked by a brutal fall of the CAC 40, dropping below 6900 points. An 8% drop that reflects the increasing nervousness of investors in the face of an increasingly uncertain economic context. As France and Europe are still adapting to the economic consequences of the conflict in Ukraine and controversial economic decisions, this plunge adds to the long list of geopolitical uncertainties.

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The impact on the Paris market has been massive, with many flagship stocks like LVMH, Airbus, Hermès, and BNP Paribas recording significant declines.

These figures highlight the extent of the widespread fall, not only in France but also globally. Beyond the CAC 40, several European and American indices have also been severely affected, escalating fears of a global recession.

• Dow Jones: -2.5%;
  
• DAX (Germany): -3.1%;
  
• FTSE 100 (UK): -1.8%;
  
• S&P 500: -2.2%;
  
• Nikkei (Japan): -2.8%.

Technical analysis and short-term prospects: a possible rebound?

The technical situation of the CAC 40 has become crucial. The index is currently under a key support at 6800 points, a level that could play a decisive role in the coming days. If this support breaks, bearish prospects will be confirmed, with resistances to watch around 7150 points.

However, analysts are not losing hope for a technical rebound, especially if an external or internal catalyst comes to restore confidence.

CAC 40 price analysis – Source: TradingView

The traded volumes are increasing, but this does not seem sufficient to reverse a bearish trend that primarily affects the large stocks in the market. The lack of positive news on economic fundamentals, notably the absence of direct support measures for businesses and consumers, limits the possibilities for a quick recovery.

As technical analyses highlight, 7500 points will be a major resistance test. In the event of a rebound, investors will need to keep an eye on macroeconomic developments and political decisions that could influence this dynamic.

The impact of European decisions: The Eurogroup faces the challenge of tariffs

The upcoming decisions from the Eurogroup, the meeting of European finance ministers, are anticipated as a potentially determining catalyst for the region’s economic future. As the global tariff crisis initiated by the United States persists, the EU must react quickly to contain the effects of the trade war.

The European policy, particularly in terms of countermeasures, could play a crucial role in stabilizing the economic situation.

Comments from Sophie Primas, government spokesperson, also reveal the seriousness of the situation:

It will be difficult to maintain 0.9% growth in 2025, it will be much lower.

These statements confirm the necessity of strong and immediate EU decisions to limit pressure on financial markets and avoid a prolonged recession. If trade tensions are not quickly alleviated, the negative effects on European economies could extend, worsening market volatility and uncertainty.

Thus, the outcome of the negotiations within the Eurogroup could not only influence monetary policy decisions but also directly affect the performances of European stock indices, including the CAC 40.

• 8% plunge of the CAC 40: worst performance since Covid;
• Trade tensions between the United States and Europe intensify the crisis;
• Support at 6800 points, resistance around 7500 points;
• Eurogroup meeting this week, response expected regarding tariffs;
• Ongoing volatility with an overall negative sentiment in the markets.

Waiting for a European reaction to Trump’s countermeasures, the market remains suspended to the decisions of the Eurogroup this week. The CAC 40 could see a rebound if European decisions go towards effective counter-attacks , but the situation remains fragile. Markets are waiting and scrutinizing the EU’s choices, which must avoid letting volatility turn into a crisis.