CAC 40 and World Indices Weekly Snapshot: Fed Cut Bets, Flat Paris Trade and a Cautiously Optimistic Global Rally (5–7 December 2025)

Published: 7 December 2025

CAC 40: Flat Week, Soft Finish Around 8,115

The CAC 40 ended the week of 5 December almost exactly where it started, underscoring how tightly range‑bound French equities have become ahead of a crucial Federal Reserve meeting.

According to Investing.com data, the CAC 40 closed Friday, 5 December at 8,114.74, down 0.09% on the day, after trading between 8,114.74 and 8,160.81. Over the past 52 weeks, the index has ranged from 6,763.76 to a record 8,314.23, with a 12‑month gain of just over 9%. ^[1]

MarketScreener notes that none of the five sessions this week moved more than 0.4%, leaving the CAC 40’s weekly performance essentially flat (around 0.0%), even as U.S. indices pushed toward fresh highs and the Euro Stoxx 50 advanced about 1.1%. ^[2]

Sector rotation on Friday was modest rather than dramatic:

• Gainers: Building‑materials group Saint‑Gobain, employee‑benefits specialist Edenred and outsourcing group Teleperformance were among the strongest names, each rising close to 3% on the day. ^[3]
• Laggards: Losses in oil & gas, utilities and financials capped index gains and ultimately nudged the CAC slightly into the red. ^[4]

This combination—select stock‑specific strength inside a broadly stagnant index—is typical of late‑cycle markets where investors are picking specific winners rather than betting aggressively on the whole benchmark.

Global Backdrop: Fed Cut Expectations Lift Risk Assets

If Paris felt subdued, the global backdrop was more upbeat.

On Friday, global shares edged higher and the U.S. dollar headed for a second straight weekly loss after a long‑delayed batch of U.S. inflation data (core PCE) broadly matched expectations, cementing consensus for a 25‑basis‑point Federal Reserve rate cut next week. ^[5]

Key points from that global move:

• Wall Street notched a second straight week of gains, with the S&P 500 close to record territory. ^[6]
• European stocks finished the day broadly flat but positive for the week, as investors digested the data and looked ahead to the Fed. ^[7]
• Japanese assets were the main outlier: the Nikkei 225 dropped 1.3% on Friday, erasing its weekly advance amid speculation that the Bank of Japan could hike rates later this month. ^[8]

In other words, the global risk mood is cautiously constructive: central‑bank easing in the U.S. is now largely priced in, but the path is very different across regions.

World Indices Round‑Up for 5 December 2025

United States: S&P 500 Near Highs, Small Caps Stumble

A snapshot from the Associated Press for Friday, 5 December shows another calm, positive day on Wall Street: ^[9]

• S&P 500: 6,870.40, +0.2% on the day, +0.3% for the week, +16.8% year‑to‑date
• Dow Jones Industrial Average: 47,954.99, +0.2% day, +0.5% week, +12.7% YTD
• Nasdaq Composite: 23,578.13, +0.3% day, +0.9% week, +22.1% YTD
• Russell 2000: 2,521.48, ‑0.4% day but still +0.8% on the week and +13.1% YTD

Large‑cap growth and technology remain in the driver’s seat, while small caps are choppier—typical when investors price in both easing financial conditions and lingering macro risks.

Europe: STOXX 600 Inches Higher, CAC 40 Lags Peers

Across Europe, Friday’s close painted a picture of modest optimism:

• The STOXX 600 ended flat on Friday at 578.87, but notched a 0.4% weekly gain, extending the prior week’s rally. ^[10]
• Germany’s DAX climbed 0.7% on the day, helped by political relief after Chancellor Friedrich Merz secured a key pensions vote. ^[11]
• Sector standouts:
  • Autos and parts surged 5.6% over the week, benefiting from U.S. moves to reverse tighter fuel‑economy rules.
  • Retail names gained about 5% week‑to‑date, helped by strong sales from Zara‑owner Inditex.
  • Technology and basic resources advanced 2.7% and 3.2% respectively, the latter supported by record copper prices. ^[12]

By contrast, the CAC 40 was “down modestly” on the week according to T. Rowe Price’s global weekly assessment, even as the broader European complex inched higher. ^[13]

The FTSE 100 in London finished the week roughly 0.5% lower, reflecting U.K‑specific headwinds that were also highlighted in weekend commentary from Share Talk, where London’s blue‑chip benchmark was described as ending the week in the red. ^[14]

Asia & Emerging Markets: Nikkei Hit, Gulf Bourses Lift

In Asia, Japan’s Nikkei 225 was the notable weak spot, sliding 1.3% on Friday as expectations of a potential Bank of Japan rate hike pushed bond yields to their highest level since 2007. Other regional indices did better: South Korea’s benchmark gained 1.4%, and the MSCI Asia‑Pacific ex‑Japan index rose 0.4%. ^[15]

In the Middle East, most Gulf markets traded higher on Sunday, 7 December, buoyed by hopes that a Fed rate cut will sustain risk appetite and support oil‑linked economies. ^[16]

Global Composite Indices: ACWI and FTSE All‑World

Broad “world” benchmarks confirm the same mildly risk‑on tone:

• The MSCI All‑Country World Index advanced about 0.07% on 5 December, continuing a steady grind higher. ^[17]
• The FTSE All‑World Index also ticked up 0.07% that day. ^[18]
• MSCI reports a one‑year return of around 17.6% for its flagship ACWI index as of 5 December, reflecting strong global equity performance led by U.S. mega‑caps. ^[19]

Forecasts: What Strategists Expect for Europe and the CAC 40 Ecosystem

Citi’s 2026 Call on European Equities

A key forecast for European stocks landed on 5 December, when Citigroup set a year‑end 2026 target of 640 for the STOXX 600, implying roughly 10.5% upside from its latest close. ^[20]

Citi’s message to investors:

• It remains constructive on European equities, expecting them to be supported by fiscal spending and the lagged impact of earlier ECB rate cuts. ^[21]
• Earnings per share were essentially flat in 2025 because of tariffs and FX headwinds, but Citi projects EPS growth above 8% in 2026 as those pressures ease. ^[22]
• The bank tilts toward cyclical sectors—banks, travel & leisure, basic resources and industrials—while downgrading European tech from “overweight” to “neutral” on valuation concerns. ^[23]

For the CAC 40, which is heavily exposed to industrials, luxury, financials and energy, that playbook effectively argues for:

• Gradual upside in the index if global growth stays resilient.
• Outperformance from cyclical CAC names versus “expensive” growth tech elsewhere.

Macro Outlook: Fed Meeting, Policy Divergence and 2026 Rate Paths

S&P Global’s “Week Ahead Economic Preview”, released on 5 December, frames the coming days as a key inflection point. ^[24]

Highlights:

• The Fed meeting in the week of 8 December is widely expected to deliver a 25‑bp cut, even though U.S. CPI has recently ticked back up to around 3.0% year‑on‑year. ^[25]
• The rationale lies mainly in a softening labour market, with weaker payroll figures signalling slower hiring. ^[26]
• S&P Global’s baseline is for two additional 25‑bp cuts in 2026, with the first not arriving until mid‑year, as policymakers wait for more evidence that inflation is genuinely under control. ^[27]

At a more strategic level, AI‑driven research from AInvest—published on 7 December—argues that the December Fed cut marks a pivot, and that 2026 will be dominated by policy divergence: the ECB pausing its own cuts, the BoJ edging toward hikes, and the PBoC easing cautiously. ^[28]

That piece suggests a 2026 playbook centred on: ^[29]

• Regional allocation: favouring Europe’s financials and select Japanese exporters.
• Sector rotation: balancing defensives (healthcare, staples) in higher‑yield environments with cyclicals in economies where policy is loosening.
• Currency hedging: especially for investors venturing into emerging markets.

For CAC 40 investors, the implication is that:

• European financials and industrials could be relative winners, aligning with both Citi and AInvest’s sector views. ^[30]
• However, policy divergence and FX volatility will matter more than usual for France’s globally exposed multinationals.

Big‑Picture Risks: AI Bubble, Geopolitics and Inflation

ING’s “Week Ahead: Who’s Afraid of the Big AI Bubble Bursting?”, published via Investing.com on 5 December, adds important colour on what could go wrong next year. ^[31]

A few key takeaways from its survey and analysis:

• In a live poll, 26% of respondents cited an AI bubble bursting as the biggest risk for 2026, while 37% pointed to geopolitics. ^[32]
• The note warns that if AI valuations correct sharply, the wealth effect for the richest U.S. households could reverse, undermining a key pillar of consumption and global growth. ^[33]
• AI is also flagged as a potential source of inflation, thanks to huge energy and infrastructure demands—an important counterpoint to the idea that AI is purely disinflationary. ^[34]

Taken together, these analyses suggest a 2026 environment where growth can remain solid, but tail risks—from tech valuations to geopolitics—loom large over world indices and the CAC 40 alike.

Technical Picture: CAC 40 Futures Flash Short‑Term “Strong Sell”

While macro strategists are broadly constructive on European stocks over the medium term, near‑term technicals for CAC 40 futures are less comforting.

Investing.com’s technical dashboard for the December 2025 CAC 40 futures contract (F40/FCEc1), updated on 6 December, shows: ^[35]

• A last price around 8,122, down 0.09%, mirroring the cash index.
• A “Strong Sell” overall technical summary in the short term, with 8 out of 9 momentum indicators (including RSI, MACD and ADX) pointing to “Sell” or “Strong Sell”.
• A 14‑day RSI near 40, signalling weakening momentum but not yet deeply oversold territory.
• Short‑ and medium‑term moving averages (MA5, MA10, MA20, MA50) tilted to “Sell”, while longer‑term MAs (MA100, MA200) remain in “Buy” territory, consistent with an intact longer‑term uptrend.

In practical terms, that setup implies:

• Short‑term caution—the index is drifting lower within its range, with momentum fading.
• No confirmed breakdown—longer‑term trend metrics still point to a bullish bias, consistent with this year’s 9% gain and the broader global equity upswing. ^[36]

For traders, the message is to respect the current consolidation range: CAC 40 remains close to record highs, but the path higher in December is likely to be choppy rather than linear.

Seasonal Context: December Tailwinds, But Not a Guaranteed “Santa Rally”

Historical data show that December is often a strong month for European indices such as the EURO STOXX 50, DAX and CAC 40, with many years seeing a so‑called “Santa rally” toward year‑end. ^[37]

However, this year’s setup is more nuanced:

• Valuations are elevated after a strong year for global equities. ^[38]
• The Fed’s December decision, plus updated economic projections, could either validate the current optimism or re‑ignite rate‑path uncertainty. ^[39]
• Macro and political risks, from AI‑related volatility to geopolitics, are front‑and‑centre in 2026 forecasts. ^[40]

That means the usual December tailwind is present—but not guaranteed—and the CAC 40’s flat performance this past week reflects that investors are reluctant to front‑run the Fed.

What This Week’s Moves Mean for CAC 40 and World Indices

Putting it all together, the 5–7 December window suggests several working themes:

1. Global risk appetite is cautiously positive.
   • World indices like MSCI ACWI and FTSE All‑World posted small gains, while the S&P 500, Dow and Nasdaq advanced again and sit near all‑time highs. ^[41]
2. Europe is participating, but France is lagging slightly.
   • The STOXX 600 and DAX advanced, but the CAC 40 finished the week essentially flat, held back by energy, utilities and some financials. ^[42]
3. Central‑bank divergence is the next big story.
   • The Fed is widely expected to cut, the ECB is seen pausing, and the BoJ may hike, creating a complex environment for multi‑region portfolios that will drive currency and sector rotation trades in 2026. ^[43]
4. Strategists are still bullish on Europe into 2026.
   • Citi’s 640 STOXX 600 target and forecasts of >8% EPS growth next year support the idea that European cyclicals—including many CAC 40 constituents—could outperform if global growth holds up. ^[44]
5. Short‑term technicals favour patience on the CAC 40.
   • Futures screens show a “Strong Sell” signal in the very near term, suggesting better entry points may emerge if the index dips within its still‑bullish longer‑term range. ^[45]

For investors following the CAC 40 within the wider universe of world indices, the message this weekend is clear:

The structural bull case for equities—and for European benchmarks in particular—remains intact, but the next leg higher will depend heavily on the Fed’s tone, the durability of the global growth story and how markets navigate AI, inflation and geopolitical risks in 2026.

References

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