French Stocks Rebound, Still Set for Weekly Loss

The CAC 40 edged up 0.2% to 7,854 on Friday but remained on track for a notable weekly loss as investors continued to grapple with uncertainties surrounding France’s fiscal outlook. Sumitomo Mitsui DS Asset Management sold its entire holdings of French government bonds, citing concerns over the country’s fiscal trajectory and underscoring growing investor unease over France’s debt burden. The French government recently unveiled plans to sharply reduce the budget deficit, with ministers detailing a €54 billion ($61.2 billion) fiscal effort to rein in spending and bring the deficit down to 5% of economic output in 2027 from 5.4% this year. Notable gainers included Schneider Electric (+1.7%), Danone (+3.0%) and Legrand (+2.0%). In contrast, Sanofi (-3.9%), Kering (-1.7%) and BNP Paribas (-0.6%) declined.

The CAC 40 Index is gaining 6 points or 0.08 percent on Friday. Leading the gains are Stellantis NV (3.05%), Danone (2.61%) and Legrand (1.97%). Top losers are Sanofi (-4.49%), Kering (-1.93%) and Credit Agricole (-1.02%).

The CAC 40 fell 1.6% to close at 7,835 on Thursday, hitting its lowest level since late March amid growing concerns over France’s deteriorating public finances. France presented its 2027 budget bill, seeking to cut spending and raise taxes as it tries to balance strained debt markets with public discontent over the rising cost of living. The country has struggled to contain its debt, with the budget deficit still well above the eurozone’s 3% ceiling. Under the draft budget, the government aims to reduce the deficit to 5% of GDP through 43 billion euros in spending cuts and other measures. France’s 10-year OAT yield surged above 4.9%, reaching its highest level since July 2002 after posting its biggest quarterly increase in nearly four decades. Losses were broad-based, with LVMH down 2.7%, BNP Paribas falling 3.6% and Airbus losing 2.6%.