French Stock Market Continues Slide Amid Geopolitical Headwinds and Budget Delays

Uncertainty over government budget negotiations and escalating international tensions have kept the French stock market under pressure, with the CAC 40 marking its fifth consecutive decline on Friday. The benchmark index dropped 29.25 points, representing a 0.35% loss to settle at 8,283.87 midway through the morning session.

Political Uncertainty Adds to Market Headwinds

The postponement of parliamentary budget discussions—originally set for Friday but now pushed to the following Tuesday—has compounded investor concerns about fiscal policy clarity. This uncertainty comes as European capitals grapple with heightened geopolitical risks, including reports of NATO deployments to defend against emerging threats. The combination of these factors has created a risk-averse environment across equities.

Defensive Positioning Evident in Sector Divergence

Luxury and cyclical stocks bore the brunt of selling pressure. Kering led declines with a 3.4% drop, followed by EssilorLuxottica sliding 3.2%, while Renault retreated 2.3%. Industrial and consumer-oriented names also faced headwinds, with Dassault Systemes, Stellantis, LVMH, Air Liquide, Schneider Electric, Hermes International and Saint Gobain all slipping between 1.1% and 1.7%. Additional weakness appeared in STMicroElectronics, Sanofi, Carrefour, Pernod Ricard, Legrand and ArcelorMittal.

Defensive and Infrastructure Stocks Show Resilience

Against the broader downtrend, a handful of names managed to gain ground. Thales emerged as the strongest performer with a 2.75% advance. Telecommunications and media stocks proved more resilient, with Orange climbing 1.85% and Publicis Groupe gaining 1.7%. Infrastructure and diversified plays also held up relatively well, with Accor up 1.4%, Airbus advancing nearly 1%, and Safran, Vinci, Eurofins Scientific, Bouygues, AXA and Eiffage posting modest gains.

The French stock market’s struggle reflects broader investor caution as traders reassess risk in light of geopolitical developments and domestic policy uncertainty.