Prime Minister Michel Barnier has unveiled a series of tax increases targeting big businesses, so French blue-chips may be active today. The spending cuts will account for just over two-thirds of the total revenue, with the rest coming from higher taxes on businesses, the wealthy and energy. The government will also propose raising taxes on airline tickets and a tax on the use of private jets. Buyouts of company shares will also be subject to an exceptional tax when the shares are cancelled.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appAccording to the plans, imposing temporary taxes on some 440 profitable companies with annual revenues of more than €1 billion would generate €8 billion next year and €4 billion in 2026. The companies in question are primarily LVMH, Hermes, L'Oreal, TotalEnergies, Schneider Electric and Sanofi, which are among the largest companies by market capitalization on the CAC 40. Among the sectors most likely to be negatively affected by the plan are utilities, telecommunications and energy, which also tend to have lower margins. Source: Bloomberg Financial LP
However, the impact on the market may be limited, AlphaValue analysts suggest, as the new financial obligations imposed on companies have already been largely priced in by the market. The impact itself may be seen more in 2025. Analysts at UBS expect that the new tax measures could reduce earnings in the CAC 40 index by as much as 9% in 2025, while the impact on the pan-European Stoxx 50 index will be around 3%. Another big concern for France could also be the long-term uncertainty about the stability of French debt, especially since Fitch (today), Moody's (Oct. 25) and S&P Global (next month) will be reviewing their credit ratings starting today.
The spread between the French OAT and the German Bund (interest rates on both countries' debt securities) was around 76 basis points on Thursday. It was previously around 47 basis points before French President Emmanuel Macron announced early elections last June. Source: Bloomberg Financial LP
The CAC40 index (FRA40) is currently trading with little volatility. Contracts have erased early declines, but nevertheless remain below the 50-day, 100-day and 200-day exponential moving averages all the time, which may suggest a continuing downtrend in the company's stock.
Source: xStation
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
