Europe's Blue-Chip Index Stays Flat Amid Policy Digestion, Eyes on U.S. Inflation Data

France’s CAC 40 index held its ground on Friday midday, trading with minimal conviction as market participants grappled with fresh policy shifts from both the Bank of England and European Central Bank. The broader uncertainty kept the index hovering flat near the 8,145 mark, down just 5.09 points or 0.06%, as traders postponed major positioning moves ahead of the crucial U.S. PCE inflation readings.

The muted sentiment reflected investors’ cautious stance following yesterday’s surprise consumer price deflation reported in the U.S., signaling potential shifts in monetary policy trajectory. This backdrop set the tone for a choppy trading session where conviction remained sparse across the French benchmark.

Winners and Losers Paint a Picture of Selective Optimism

Within this flat market environment, selective strength emerged in certain quarters. Renault emerged as Friday’s standout performer, surging 1.5% after S&P Global elevated its credit rating from BB+ to BBB-, signaling improved creditworthiness with a stable outlook. This upgrade provided a meaningful catalyst in an otherwise directionless session.

Beyond Renault, modest gains were scattered across defensive and cyclical names alike. Eurofins Scientific climbed approximately 1.35%, while Accor, Engie, Societe Generale, STMicroelectronics, Credit Agricole and Safran all inched upward by 0.5 to 0.8%, suggesting some appetite for quality names despite the uncertain backdrop.

Conversely, the downside saw more pronounced weakness. Kering slipped 1.7%, likely weighed down by luxury sector headwinds, while ArcelorMittal eased 1.6% and Unibail Rodamco dropped 1.4%. Energy and luxury exposure proved particularly heavy, with L’Oreal, Capgemini, Pernod Ricard, Saint Gobain, Hermes International, Edenred and Dassault Systemes all drifting lower by 0.8 to 1.2%.

French Producer Prices Add to the Economic Narrative

On the economic data front, France’s domestic producer prices registered a 1.1% month-over-month increase in November according to INSEE, reversing the stagnation observed previously. However, the annual comparison painted a starker picture—producer prices contracted 3.3% year-over-year, marking the steepest decline since December 2024 and accelerating from October’s 0.8% contraction. This deepening deflationary pressure underscores the economic challenges facing the eurozone despite the flat near-term performance of equity indices.