French Markets Slide Amid U.S. Fiscal Concerns and PMI Dips

French stocks drop on fiscal worries and poor manufacturing data. The CAC 40 is down 0.91% as economic uncertainty weighs heavy, reinforcing concerns for investors in the upcoming months.

Date: 22-05-2025

AI Rating: 4

Manufacturing Sentiment Impacts Stocks
Recently reported data on France's manufacturing sentiment indicated a notable decline, with the index falling to 97 in May from 100 in April, failing to meet forecasts of 99. This drop reflects deteriorating global orders and adverse personal production expectations, which negatively affects investor sentiment and could lead to lower revenue projections for companies within the index. As investors are concerned about the uncertainty shown in the increase of the economic uncertainty index to 32 from 29, it raises questions about future earnings growth.

In the U.S., President Trump's proposed fiscal policies are causing apprehension among investors, with fears of increased government debt and a potential slowdown in economic growth. This may have broader implications for the earnings outlook, as companies with exposure to the U.S. economy could face pressure on profitability margins and larger capital projects due to reduced consumer spending.

Despite these negative indicators, companies like Thales and those with marginal upward movement might present opportunities for investors looking for relative stability. However, the overall downtrend in the CAC 40, where several major companies like Stellantis and LVMH are seeing declines of more than 3%, suggests a cautious stance should be adopted in the next one to three months. These declines could lead to lower EPS expectations and poorer net income results, weighing heavily on investor decisions during this turbulent period.

Stocks: SNA LVMH REN CAP PENR OR TTE VIE