European stock indices are struggling: The CAC 40 is particularly hard hit

European stock market indices have all been struggling since mid-May. But one has suffered more than the others. Since its last record high on May 15, at 8,239.99 points, the CAC 40 has lost more than 11%. That is twice as much as the German DAX (-5.33%) and five times as much as the British FTSE 100 (-2.18%). It has also fallen more sharply than the EuroStoxx 50, the index of large-cap European stocks, which has dropped 7.76%.
 

The CAC 40 Wipes Out Its Year-to-Date Gains
The Paris Stock Exchange’s main index has wiped out all the gains it had accumulated during the first four months of the year. In the wake of a strong DAX (+12.24%), it had nevertheless gained 9.24%, slightly outperforming the “Footsie” (+9.21%).
Reversal of Trends
But everything turned around, and the trends diverged. The announcement of the dissolution of the National Assembly initially caused the CAC 40 to experience its worst week since the end of winter 2022 (-6.23%). London subsequently reclaimed from Paris the title of Europe’s leading stock market, a position it had taken from Paris at the end of 2022.
 

Political Instability and Volatility
This prolonged period of political instability, which is still ongoing, has weighed on France’s leading stocks and partly explains the high volatility observed since then. 
 

Exposure to China's Economic Challenges
The CAC 40 also suffered significantly from greater exposure to China's economic challenges than its European counterparts. Beijing’s release of poor consumer spending figures in mid-July sent the luxury sector—one of the main drivers of the Paris index—plummeting. LVMH (owner of *Les Echos*) has fallen 19.4% since mid-May, and Kering has dropped 17.1%.
The automotive sector has also suffered heavily, despite having been a key driver of the index earlier in the year. Renault has fallen nearly 15% since mid-May. At the same time, Stellantis shares have lost nearly a third of their value (-30.47%).
 

DAX Resistance
With the German automotive sector heavily exposed to China, the DAX was also severely impacted by the Chinese slump, with Porsche, Volkswagen, and Daimler each falling about 20% over the same period. However, the chemical sector helped the Frankfurt index limit its losses.
 

London Benefits from a More Favorable Political Environment
In London, the FTSE 100 has, for its part, benefited from a more favorable political environment since the Labor Party’s victory in the general election in early July. And since mid-July, it has benefited from its lower exposure to the tech sector, just as U.S. tech giants began to lose ground after reaching stratospheric valuations. This has allowed it to widen the gap with its European competitors.