21 October, 2025

France Equity Rally After Political Stabilisation

Summary

Highlights

After this week’s relief rally, the CAC 40 is nearly back to its February highs, having almost fully recovered prior losses.
Government bond yields also fell this month, indicating declining political uncertainty.
Volatility could return amid risks over budget discussions and uncertainty over the government’s future.

French equities are positive year to date Source: Amundi Investment Institute, Bloomberg, as of 16 October 2025. CAC 40 index. Line chart of the CAC 40 index year-to-date showing a recovery from April lows to near-February highs, with values rising from about 6800 to above 8200 and an upward trendline indicating almost 20% gain since April.

In this edition

French Prime Minister (PM) Lecornu secured wins in two no-confidence motions in the National Assembly, triggering a rally in French stocks, and paving the way for additional discussions over a draft budget. Markets welcomed the news that the country, for the time being, has avoided snap elections and the political uncertainty has eased.

The victory came following the PM’s pledge to suspend President Macron’s landmark pension reform by freezing the planned increase in the retirement age until the 2027 presidential election. While uncertainty over the government’s future, the management of public finances and credit rating revisions persist, the new PM is likely to aim to pass the 2026 budget before year-end. On a positive note, the country’s economic growth is expected to improve modestly as it moves towards 2026, though policy uncertainty may weigh on household confidence.

Key dates

20 Oct

China GDP, industrial production and retail sales

23 Oct

US existing home sales, France business confidence

24 Oct

US inflation, global composite, manufacturing and services flash PMIs

Read the full article on the Amundi Research center

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