The CAC 40 index has slipped into correction territory, dropping more than 11% from its August peak of €8,753 to the current €7,782. The decline comes amid ongoing protests in France and a rise in government bond yields. Investors are now turning their attention to a handful of key French stocks, including Airbus, TotalEnergies, BNP Paribas, Société Générale, and Crédit Agricole, as earnings season and central bank decisions loom.
TotalEnergies rides oil rally to record highs
TotalEnergies shares have been on a strong upward trajectory this year, closing last week at €83.45, a record high. The stock has surged roughly 70% from its 2023 low, pushing the company's market capitalization to €187 billion. The rally is largely driven by the recent spike in crude oil prices, with Brent approaching the $120 per barrel mark. Analysts expect further gains as the US and Israel prepare for a potential military strike against Iran, which could disrupt energy supplies in the region.
Iran has warned it would target all energy infrastructure in the region if attacked, and officials note that Iran's capabilities are more advanced than those of the Houthis, who have previously caused significant damage in Saudi Arabia. The company's latest earnings showed second-quarter sales of €61.7 billion, up from €49.6 billion a year earlier, while net income jumped to €5.4 billion from €2.68 billion. With energy prices remaining elevated, the upcoming third-quarter report is expected to show continued acceleration in revenue.
Airbus faces headwinds ahead of earnings
Airbus shares have retreated from their August high of €217 to around €192, mirroring weakness across the aerospace sector, including Boeing, Bombardier, GE Aerospace, and Rolls-Royce. The company is set to release its quarterly results, with analysts forecasting consolidated revenue of €17.9 billion. Commercial aircraft revenue is expected to reach €12.9 billion, while helicopters and defense & space are projected to contribute €1.99 billion and €3.2 billion, respectively. Net income is anticipated at €1.29 billion.
However, Airbus faces challenges in its civil aviation business, leading the company to lower its full-year delivery target to 870 aircraft, down from the previously expected 880. The reduction is partly attributed to ongoing issues with engine supplier Pratt & Whitney.
French banks under pressure ahead of earnings and ECB decision
French banking stocks have suffered significant declines in recent months, with BNP Paribas down over 26% from its year-to-date high, while Société Générale and Crédit Agricole have fallen 30% and 27%, respectively. These banks have erased most or all of the gains they made earlier in the year, as investors worry about slowing growth and stretched valuations.
The upcoming earnings reports and the European Central Bank's interest rate decision will be key catalysts. Economists expect the ECB to hold rates steady but signal the possibility of further hikes, which could impact bank margins and loan demand.
Investors will be closely watching these developments as they assess the health of the French and broader European financial markets.
This article is for informational purposes only and does not constitute financial advice.
