CAC 40: On the way to 7,000 points?

In September 2000, at the height of the internet bubble, the CAC 40 reached an all-time high. It flirted with the 7,000-point mark. A level that the French index will never reach.

More than 20 years later and with positive growth over the last 7 months, the question is more than ever. Can the CAC 40 break its all-time high in the coming weeks? Could this barrier be broken permanently or should we fear a sharp correction? Two questions that deserve some clarification.

The CAC 40: +80% in 18 months

To understand how far we have come, it is important to look back. It is March 18, 2020. The whole world is in total uncertainty. Covid-19 has just been declared a global pandemic by the WHO (World Health Organization) and the markets are panicking. Or rather, they are tensing up. On this date, the CAC 40 was at 3,755 points, a level not reached since 2014. In the space of 14 days, the index has just lost more than 30% of its value.

The following chart shows the evolution of the stock market index over the last 5 years. The dip caused by the first days of the health crisis is particularly visible.

Le CAC 40 : + 80 % en 18 mois

If the fall is vertiginous, it quickly gives way to an extremely powerful bullish dynamic. Although this was interspersed with correction phases of varying lengths. On 3 June, the CAC 40 broke through the 5,000-point barrier. In November 2020, it even returned to the level it had reached before the March crash. The 6,000-point mark was passed in March 2021, barely a year after the start of the health crisis. Just over 5 months later, the 6,800 mark has just been passed.

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The Stock Market Explosion: A Global Phenomenon

If the good health of the CAC 40 jumps out at us, it should in no way hide the good success of all the stock market indices around the world. On the other side of the Atlantic, the S&P 500 and the NASDAQ are also on a record-breaking trend. The same is true in Europe with the DAX 30 and the FTSE 100 on the London Stock Exchange.

While the results of French companies were even better than expected, the same was true for most of the world’s economies. Results that have allowed all of these indices to swell in recent weeks. If we compare since the beginning of the year, the S&P 500 is up nearly 20% while the NASDAQ has gained over 16%. This development seems to be in line with the CAC 40, which is up nearly 22% over the same period. The same is true of the DAX 30, which is up 15%, and to a lesser extent the FTSE 100, which is up 8% since the beginning of 2021.

For the CAC 40, the index still seems to be boosted today by the Atos share. After brutally <a href=”” target=”_blank” rel=”noopener”>last month’s collapse, the share price has picked up in recent days. With a growth of more than 10% on Friday’s session. A rise confirmed today by 4% increase. A phenomenon that seems to be explained by the interest of some investment funds for the group.

CAC 40: Beware of the Risk of Correction

CAC 40 : Gare au Risque de CorrectionFor many analysts, exceeding this threshold could be the catalyst for a price correction. A correction that could also occur well before. Thus, chart analysis suggests resistance zones around 6,850 to 6,900 points. Points of tension that the investor will have to take into account in the days to come.

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A risk of correction made all the more obvious today by certain economic indicators. Indeed, certain variables seem to suggest a decline in global growth. This is particularly true of the slowdown in Chinese export growth. While the expected increase for July was 20.8%, it ended up being only 19.3%. These figures could have an impact in the longer term. Especially if the trend continues.

Other elements such as the progress of vaccination on a global scale should also hold the attention of the financial markets in the weeks to come. In any case, the risk of a correction seems very real.