U.S.-EU Trade Agreement Opportunity Boosts CAC Stock Market Growth by 1.3%
The French stock market saw a surge on Wednesday, with the benchmark CAC 40 climbing up 1.32%, as numerous French companies reported positive financial results and optimism surrounding ongoing trade negotiations between the European Union (EU) and the United States (US) persisted.
Teleperformance, a leading global outsourcing company, reported a 3.1% climb, while French stocks found themselves in positive territory overall. Major companies such as Michelin, Pernod Ricard, Eurofins Scientific, Thales, and several others saw nearly 2% growth.
Thales, an aerospace and defense company, reported an adjusted net income of 877 million euros for the first-half, marking a 1% increase from the previous year. The company also expects its adjusted EBIT margin to be in the range of 12.2% to 12.4% for fiscal 2025.
In the luxury goods sector, Kering, the company behind brands like Gucci and Saint Laurent, saw a 3.85% gain. Meanwhile, Alstom, a French train maker, experienced more than 4.5% growth following the announcement that its first-quarter sales exceeded estimates.
The automotive industry also saw significant growth, with Renault rising 3.3% due to a 1.3% increase in vehicle sales in the first half of the year. Stellantis, a major automaker formed by the merger of Fiat Chrysler Automobiles and PSA Group, saw nearly a 7% rise.
However, not all sectors fared equally well. Companies such as Engie and Orange experienced modest declines, while STMicroElectronics saw a nearly 3% drop.
The upcoming trade negotiations and meetings between leaders are critical, as the EU is prepared with countermeasures but a last-minute deal remains possible. The EU has adopted its largest-ever countermeasures—a package of additional customs duties and export restrictions—set to begin if negotiations fail by August 7. These countermeasures represent around EUR 93 billion ($109 billion) in customs duties and reflect the EU’s readiness to retaliate strongly to protect its interests.
The outcome of these negotiations will significantly influence French and broader European market confidence and trade-exposed stocks. A successful trade agreement would likely relieve uncertainty and improve prospects for these companies by avoiding punitive tariffs and boosting cross-border trade. Conversely, an unresolved trade conflict or imposition of tariffs could negatively affect sectors exposed to transatlantic trade, including key French industries such as automotive, agriculture, and luxury goods.
As European Commission President Ursula von der Leyen and President Donald Trump are scheduled to meet soon to discuss trade, the future of these negotiations remains uncertain. However, optimism persists, and the French stock market continues to reflect this, with many companies experiencing growth amidst the ongoing trade talks.
Investing in French businesses that have positive financial results and operate within sectors benefiting from ongoing trade negotiations, such as the automotive industry (Renault, Stellantis), luxury goods sector (Kering), and aerospace and defense (Thales), might yield returns in the finance industry. Conversely, neglecting countermeasures and failing to reach a successful trade agreement could negatively impact certain sectors, like automotive and agriculture, exposing them to punitive tariffs and reducing cross-border trade, potentially affecting the overall health and growth of the industry.
