Cautious Sentiment Weighs on CAC 40 as Investors Await Fed Decision; Thales Stands Out

French equities struggled for traction Tuesday as market participants adopted a guarded stance ahead of the Federal Reserve’s policy announcement scheduled for Wednesday. The CAC 40, France’s primary stock index, slipped 30.79 points to settle at 8,077.64, representing a 0.38% decline by midday trading.

The cautious market atmosphere reflected investor hesitation despite an initially positive open driven by strength in the defense sector. This defensive positioning underscored broader uncertainty about monetary policy directions and potential economic impacts.

Winners in Focus

Thales emerged as a standout performer, surging 3.5% amid broad-based demand. The aerospace and defense specialist’s gains highlighted the sector’s appeal during periods of market caution. Safran, another defense heavyweight, managed to hold onto modest gains of 0.8%, though it retreated from earlier highs. Airbus, the third member of this sector trio, gave back most of its gains, finishing slightly negative at -0.3%.

Financials showed resilience in the cautious trading environment. Credit Agricole climbed 1.85%, while ArcelorMittal, BNP Paribas, Edenred and Euronext each advanced between 1.3% and 1.5%. Capgemini posted a 1% gain, with Publicis Groupe, Pernod Ricard, L’Oreal, AXA and TotalEnergies adding modest increments.

Notable Declines

EssilorLuxottica led the downside with a sharp 4.4% drop. Kering weakened by 1.8%, while Schneider Electric, Stellantis, Bureau Veritas, LVMH, Eurofins Scientific and Air Liquide experienced losses ranging from 1% to 1.6%.

The divergent performance underscored the cautious approach many investors were taking, selectively rotating into perceived safer havens while trimming exposure to more cyclically-sensitive segments ahead of the Fed’s policy guidance.