Paris stock market falls, should we be worried?

While the CAC 40 recorded a remarkable performance in the first quarter of 2023, when the index rose by 13%, the months that followed were mixed with CAC 40 prices stuck in a trading range. Since the beginning of September, things have taken a turn for the worse, with the CAC 40 down 6 percent. Paris stock market falls, should we be worried?

Let’s discover together the reasons for this decline in the
CAC 40 index
by analyzing the graphical and fundamental elements, and try to determine the scenarios that could occur for the CAC 40 price at the end of 2023 and the beginning of 2024. Should we worry about the Paris stock exchange falling or is this an opportunity to seize an opportunity?

Why is the CAC 40 falling?

The reasons that disrupted the upward trend of the CAC 40 in September 2023, to make the Parisian index record a loss since the beginning of the year, are multiple.

First of all, it is the rising risk of recession, or even the emergence of the beginnings of a recession, that has been worrying stock markets since early September. If a period of recession were to be confirmed, this would be a factor that could keep the CAC 40 well below the key zone of 7,000 points. Any sign of weakening of the French economy creates doubts among investors.

On the other hand, if inflation appears to be under control, central banks seem reluctant to cut interest rates and are even considering further increases in policy rates, a rise in interest rates that is becoming increasingly difficult to sustain. the real estate market. Do not forget that the 2008 crisis emerged from a rather similar context. A major real estate crisis could affect the banking sector and, through a domino effect, the rest of the financial markets.

War and geopolitical instability also weigh heavily on the morale of investors who find it difficult to plan for the future. Whether it is the war in Ukraine, which continues over time without any real hope for peace, but also the situation in West Africa or more recently in Palestine and Israel, these situations make the global geopolitical climate and the world economy bleak.

Any negative geopolitical news, such as the agreement between Russia and North Korea or the recognition of NATO’s weakness by Admiral Rob Bauer, are all motives for investors to turn to geopolitical products. Interest rates make savings products that have been avoided for many years in favor of stock markets more attractive.

It is therefore a cocktail of concerns, economic instability and rising interest rates that is driving capital flows from the CAC 40 towards fixed income or debt products. Remember that the functioning of our modern economies depends largely on the effects of liquidity transferring from one type of investment product to another.

In summary, the economic context and fundamentals are quite poor at the moment. This is largely what explains the recent decline in the CAC 40 index. However, we observe that market participants are looking for good news, and while all the points we have discussed cannot be resolved at once, all it takes is good news to bring back optimism among operators trading on the CAC 40 index.

Technical analysis of the CAC 40 at the end of 2023

From a purely chartist point of view, the CAC 40 index remained in a trading range for much of 2023 (March 2023 to August 2023), moving between major resistance at 7,500 points and support at 7,070 points. It was therefore a market without any real trend for the CAC 40, which still held out hope for a resumption of the rise before the end of 2023.

Although the start of 2023 was promising for the CAC 40, it was nevertheless an exit of the trading range from the bottom with the breaking of the support of 7,070 points, as noted on October 2, 2023, a bearish break of the CAC 40 was supported by the economic and fundamental factors previously exposed.

Source: Vikingen.se

About the Viking

With Viking’s signals, you have a good chance of finding the winners and selling in time. There are many securities. With Viking’s autopilots or tables, you can sort out the most interesting ETFs, stocks, options, warrants, funds, and so on.

Click here to see what Vikingen offers: Detailed comparison – Stock market program for those who want to become even richer (vikingen.se)