2024 Outlook: The Standouts and Disappointments of the CAC 40, by Saxo Bank
According to an analysis published by Saxo Bank, the CAC 40 ended 2024 on a down note, posting one of the worst performances among European indices. In negative territory, it also ranked among the world’s worst-performing indices, a situation that reflects the tense political and economic climate in France.
A Challenging Political and Economic Environment
The dissolution of the National Assembly has led to institutional paralysis, heightening uncertainty for investors. Added to this is the threat of new U.S. tariffs on European imports, which is weighing on growth in the eurozone. Despite the government’s efforts to reduce the public deficit to 5% by 2025, the markets remain cautious, as rating agencies have maintained stable but reserved outlooks.
Tensions surrounding interest rates also marked the year. The yield on 10-year French bonds briefly exceeded that of Greece before falling back below 3%, illustrating the challenges surrounding the attractiveness of French debt. This spread with Germany, at around 85 basis points, reflects more a preference for German debt in times of uncertainty than a genuine lack of confidence in France.
Opportunities on the Horizon Despite the Downturn
Despite these challenges, some positive signs are emerging. The CAC 40 has held its critical support level around 7,100 points and could benefit from a recovery driven by global trends. China, in particular, has announced significant stimulus measures coupled with an easing of its monetary policy. These announcements could provide support for European companies with exposure to that market.
Furthermore, the euro’s depreciation against the dollar is boosting European exports, while European stock market valuations—which are more attractive than those in the United States—could draw international investors. Finally, the European Central Bank is forecasting a gradual reduction in interest rates in 2025, providing a much-needed boost to the markets.
The 2024 Winners: Top-Performing Stocks
Some companies managed to come out on top despite a challenging environment.
• Hermès continues to shine with impressive growth of 14%, driven by high margins and operating income of 3.1 billion euros, representing 42% of its revenue.
• Safran posted significant growth thanks to strong demand in the aerospace and defense sectors, with revenue up 19.2%.
• EssilorLuxottica is capitalizing on its innovations, notably the Ray-Ban Meta smart glasses, and strengthening its position in Asia through strategic acquisitions.
• Saint-Gobain, buoyed by sustained demand in North America and the Asia-Pacific region, posted robust EBITDA of 3.7 billion euros.
• Renault, despite facing challenges in the automotive sector, posted a 13% increase, thanks to its focus on electric vehicles and its Renault Occasion initiative.
The Losers of 2024: Major Challenges
In contrast, several large companies had a difficult year.
• Kering is down 38%, mainly due to a slowdown at Gucci in Asia and Russia.
• BNP Paribas, despite 9% growth in its investment division, is suffering from weak consumer credit.
• STMicroelectronics is facing supply chain pressures and high energy costs, which are weighing on its margins.
• Stellantis is plummeting by more than 30%, weakened by competition in the electric vehicle sector and a change in leadership.
• TotalEnergies’ stock is being dragged down by volatile oil prices, although a positive outlook is emerging for 2025.
In 2025, trends to watch
While 2024 was marked by uncertainty and overall underperformance, 2025 could offer opportunities for a recovery, particularly thanks to more accommodative monetary policies and a potentially more stable macroeconomic environment. Investors will keep a close eye on the resolution of political tensions and corporate earnings trends to gauge the trajectory of the CAC 40.
