The CAC 40 of the Paris stock exchange reaches a new record! Driven by LVMH!

The CAC 40 never ceases to set new records. On Tuesday, it reached a new historical peak above 7600 points in the stock market. A reason to rejoice for investors, even if the index is only making moderate progress at the moment.

The heavyweight LVMH boosts the CAC 40

It is unequivocally the LVMH group that is driving the CAC 40 upwards in the stock market. On Friday, the world leader in luxury goods reported historic results for 2022, with sales exceeding 79 billion euros.

The LVMH share price soared by over 12% that day, pulling the CAC 40 along with it to beat its closing record. With its 385 billion in market capitalization, LVMH accounts for more than 10% of the index calculation. Therefore, each fluctuation in its share price has a magnified impact on the overall market.

On Tuesday, the momentum provided by the luxury giant continues to support the CAC 40. Even if LVMH’s stock is slightly stagnant in early trading, the memory of its record results is enough to maintain the upward dynamic.

Interest Rates in the Stock Market to Decrease Soon?

But LVMH is not the only factor. In recent days, investors have also been betting on a possible deceleration of the monetary tightening by central banks in 2023. Several members of the ECB have suggested a slowdown in rate hikes, perhaps as early as March.

A cheerful prospect for the stock markets. Lower interest rates would stimulate the economy and corporate earnings. The same sentiment is shared in the United States, where the Fed begins its monetary policy meeting on Tuesday. Market players are watching for any sign of a pivot towards a less aggressive stance in the coming months.

Caution Before GAFAM Earnings

Nevertheless, certain factors call for caution. The financial markets are anxiously awaiting the earnings reports from the US tech giants in the coming days. The accounts of Alphabet, Microsoft, Apple, Amazon, and Meta for the last quarter of 2022 are under particular scrutiny.

Any disappointment could dampen the enthusiasm of the markets. Furthermore, the stagnating growth of the eurozone, expected at -0.1% for the October-December quarter, serves as a reminder that the economy is going through difficult times.

Driven by the powerhouse LVMH and expectations of lower interest rates, the CAC 40 of the Paris stock exchange reached a new historical peak on Tuesday. A cause for satisfaction for investors, although some concerns such as the upcoming GAFAM earnings call for caution. In any case, this new record confirms the vigor of the Paris market at the start of 2024.