The Parisian index has fallen during the early part of the Thursday session, slicing through the €8500 level and the 50-day EMA, both of which could have been thought of as potential support levels before the move.
This is an area that many will be watching closely, and could represent value if the larger companies start to move to the upside again.
That being said, there is a zone between the €8500 and the €8400 level that previously had been a zone of resistance, and now traders will be watching to see if that offers a zone of support in a bit of market memory.
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Luxury Sector Exposure and Yield Pressures
The market participants will be watching a lot of different moving pieces at the same time, and the CAC 40 Index is possibly going to be at risk for a lot of Middle East noise, mainly due to the fact that there is a heavy luxury sector in this index, and many of those luxury goods are bought hand over fist by Middle Eastern consumers. With the war raging on in the Middle East, it's difficult to get a clear read of profitability for some of these companies.
That being said, it is worth noting that the drag on the index includes Hermès losing 1.1%, LVMH losing 1.4%, AXA losing 1.1%, and several others. The luxury sector in general has been a bit soft.
The big early leaders are Stellantis and Michelin, but unfortunately, the situation with crude oil rising and the 10-year yield in France at 4.15%, it is causing a bit of concern in the overall index. The 10-year yield is up 17.5 basis points in the last month alone, and it is starting to put a drag on equities.
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