The CAC 40 Index futures jumped by over 1% on Monday, reaching a high of €7,930, up from last Friday’s closing point at €7,835. It has jumped by over 15% from its lowest point in April.
US and European Union trade deal
The main catalyst for the ongoing surge in the CAC 40 Index is the US-EU trade deal announced on Sunday. This trade deal will see most European goods pay a 15% tariff to the United States.
At the same time, the European Union will make vast investments in the US and buy more goods, including military equipment and energy.
This deal helped to prevent a trade escalation on August 1. Trump had threatened to implement a 50% tariff on all goods brought to the US from Europe. Europe, on the other hand, had created a slate of American goods that would be subject to tariffs.
Still, the 15% tariff on European companies will negatively impact some top CAC 40 constituents, such as Airbus, Dassault Aviation, LVMH, Michelin, and Hermès. French companies exported goods worth over $55 billion to the United States last year.
The US-EU trade deal came a few days after the European Central Bank (ECB) paused its interest rate cuts. In a statement, Christine Lagarde justified the decision, noting that her committee was in a wait-and-see for the trade deal.
Top CAC Index companies earnings
The next important catalyst for the CAC 40 Index this week are earnings from some of the biggest companies. Essilor, the biggest eyewear company globally, will be the first to watch. It will be the first earnings after Meta Platforms took a minority stake.
The other notable companies to watch will be luxury goods firms like Kering and Hermes. Kering, the parent company of Gucci, has been in the spotlight in the past few years as its growth has slowed because of its Chinese business.
Hermes, on the other hand, has performed well and outperformed other luxury stocks, such as LVMH and Burberry.
L’Oréal, Air Liquide, and Orange will publish their results on Tuesday, while Airbus, Danone, Cap Gemini, and Worldline will release their numbers on July 30.
The other top CAC 40 companies to watch will be Sanofi, Schneider Electric, Safran, and banks like Credit Agricole and Societe Generale. Firms like Vivendi, Air France, Renault, and Accor will also release their quarterly financial results.
Most importantly, the largest global companies, such as Microsoft, Apple, and Amazon, will also publish their earnings. The Federal Reserve will also publish its interest rates decision.
CAC 40 Index analysis
CAC 40 Index chart | Source: TradingView
The daily chart shows that the CAC 40 Index has staged a comeback in the past few days. It has remained above the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bulls are in control.
The index has moved above the upper side of the descending channel, which formed the flag section of the bullish flag pattern. Additionally, the Relative Strength Index (RSI) has risen to 55.
Therefore, the CAC 40 Index will likely continue rising as bulls target the key resistance at €7,960, the upper side at €7,960. A move above that level will point to more gains, potentially to €8,000.
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