CAC 40: Volatility and the Power of Luxury in the Heart of Europe
An in-depth analysis of recent fluctuations in the CAC 40 index, growth in the luxury sector and general trends in the European economy.
In the first month of 2024, the CAC 40 index followed a remarkable path, a manifestation of uncertainties in Europe’s economic dynamics and strong performances in the luxury sector. At the beginning of the year, the Paris Stock Exchange suffered a drop following the publication of PMI indices for the manufacturing sector, falling to 7543 points after a 16.5% increase in 2023. Later in the month, however, the CAC 40 reached record highs, thanks in particular to the strong annual performance of companies in the luxury sector. LVMH’s annual performance, for example, helped the index rise 2.28% to 7634.14 points.
Behind these fluctuations lie general trends in the European and global economy. Inflation reports and corporate results from Europe’s largest economies attracted investors’ attention. While the slowdown in inflation in France in January was welcomed, the US Federal Reserve’s (Fed) decision on interest rates was an important focus. While the Fed is expected to keep interest rates unchanged for the fourth time, investors looked for clues about potential rate cuts.
The luxury sector was particularly notable. Shares in LVMH, Kering and Hermes fell as a result of the fourth consecutive manufacturing contraction in January due to their exposure to China. However, LVMH performed impressively, posting sales of 86.2 billion euros in 2023 on 13% organic growth. This led to an organic sales increase of 14% in fashion and maroquinerie and an 8% rise in operating profit to €22.8 billion.
The overall performance of the CAC 40 index, and in particular the success of companies in the luxury sector, offers important clues about the future of the European and global economy. This is a situation that investors and market observers should continue to follow closely.
Footnote: This article discusses the performance of the CAC 40 index in January 2024 and the factors affecting this performance. The purpose of the article is to inform readers about current market trends and economic dynamics.
