The CAC 40 index has done well this year and is hovering at its highest level on record, as focus shifts to the upcoming European Central Bank (ECB) interest rate decision. It was trading at €8,173 on Thursday, a few points below the all-time high of €8,260.
European Central Bank decision ahead
The CAC 40 index has surged this year, mirroring the performance of other European indices like the German DAX and Spain’s IBEX 35. The Stoxx 50 and 600 indices have surged to their highest levels on record.
This performance happened as investors ignored the recent warnings from Donald Trump about tariffs. Trump has hinted that he will apply a 25% tariff on European goods as he works to narrow the trade deficit that exists between the two regions.
He believes that tariffs will encourage more European companies to move to the United States, which is a critical market. Trump also hopes to raise money using tariffs and offset them by cutting taxes on consumers and businesses.
The challenge, however, is that Europe is a major buyer of American goods, meaning that retaliations may be painful to the US.
The next key catalyst for the CAC 40 index will be the upcoming European Central Bank (ECB) interest rate decision. Economists expect that the bank will continue cutting rates this week to support the economy. Recent ECB cuts have helped to support European equities, including those in France.
Chinese economic recovery
The CAC 40 index has done well as investors target the performance of the Chinese economy. Beijing has set a growth target of 5% for this year even as it enters into a trade war with the United States.
Macro data released this week showed that the Chinese economy was recovering. For example, the manufacturing and services PMI figures have remained above the expansion zone of 50.
CAC 40 index companies are highly exposed to the Chinese economy. This is specifically important to luxury group companies like LVMH, Kering, and Hermes, which have made billions of euros in the country.
Analysts are optimistic that the Chinese economy will do well this year, which will provide more catalysts to these French companies. Also, with tensions between Europe and the US rising, there is a likelihood that these countries will pivot to China.
Further, French stocks have done well as European countries vow to boost spending, especially in the defense industry.
CAC index top movers in 2025
Most companies in the CAC 40 index have done well this year, with many of them rising by double digits.
Thales stock price has jumped by over 76% this year, making it the best-performing company in the index. Its growth happened as its key segments like defence, aerospace, and cyber space saw significant demand.
Societe Generale stock price has soared by over 48% this year, while BNP Paribas, Bouygues, Sanofi, and EssilorLuxottica have soared by double digits.
Read more: This DAX index stock is up 95% in 2025: can the RHM rally continue?
CAC 40 index analysis
CAC index chart by TradingView
The weekly chart shows that the CAC 40 index has surged in the past few months. It has remained above the ascending trendline that connects the lowest swings since September 2022.
The index has moved above all moving averages. Also, it has formed an ascending triangle pattern whose higher side is at €8,247. This triangle is one of the most bullish continuation signs.
The CAC index has remained above the Ichimoku cloud indicator. Therefore, the stock will likely keep rising as bulls target the next psychological point at €8,500. This view will be confirmed if it moves above the resistance point at €8,247. The alternative scenario is where it drops to the ascending trendline.
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