FRA40

The CAC 40 is the benchmark French blue-chips stock market index. CAC is an abbreviation of the French Cotation Assistée en Continu, which stand for Continuous Assisted Quotation, a quotation system at Paris Bourse that is now Euronext Paris. The index was created in 1998, and is calculated on 40 most significant stocks traded at the Euronext Paris. The market cap of the index if about 80% of the total market cap of the French stock market. So, it may serve as an indication of the French economy. And this index has specific features:
- It is the index of the national scale as the DAX40 in Germany;
- The index is well balanced by sectors and companies. The total market capitalisation of a particular company inside the index should not exceed 15% of the Index market cap. Airbus, BNP Paribas, Credit Agricole, Danone, Hermes Int., L'OREAL , Legrand, Michelin, Renault, Societe Generale, Total and other French companies are included in the index;
- The index is updated during weekdays through 9:00 am to 7:30 pm Paris time (UTC+2);
- The CAC 40 is driven by the French economy data and Eurozone macroeconomic data too. Rising GDP, employment, retail sales, business activity all support the index. If this data is negative, it will likely result in a declining index;
- France is the second largest economy in EU. Thus, the index has a historic upside trend, and could be considered for long-term investments. Risks should also be considered while investing in CAC 40;
- The index has strong correlation with the U.S. S&P 500 broad market index and German DAX 40. It has also some exposure to other European stock indexes;
- The index is very sensitive to the actions of the European Central Bank (ECB) as the monetary policy of the European monetary regulator directly affects the business performance of French companies. Rising interest rates, borrowing cost, declining monetary supply cuts, corporate profits, and consumer demand affect the index. Monetary tightening puts pressure on the index, while easing monetary policies support the index. The index has an exposure to other European central banks actions like Bank of England and Swiss National Bank;
- High inflation in the Eurozone puts pressure on the index. If inflation is far above the 2% target, it may lead to additional monetary tightening by the ECB. If inflation is below the target, retail sales are likely to expand, which supports the index;
- The CAC 40 is a risky asset and reacts to risk appetite and investors’ sentiment. Positive developments in the global economy and geopolitics support the index, while uncertainties, stress, and geopolitical tensions put pressure on the index;
- The index could be traded via CFDs, futures, or designated ETF’s;
- The index is linked to the European stock market’s opening hours, but futures and CFD trading on the index continues mostly throughout a 24/5 basis, excluding weekends. So, the index may open with a gap if something very important has happened during a weekend.