CAC 40 Slides Over 1% Amid Oil Price Surge and Geopolitical Tensions

French equities faced a significant downturn on Thursday, with the CAC 40 index dropping over 1% as escalating U.S.-Iran tensions and surging oil prices raised fears of inflation and economic slowdown. The index fell 89.32 points, or 1.1%, to 7,891.95 in early afternoon trading. The decline followed U.S. President Donald Trump's announcement of potential further strikes on Iranian energy infrastructure, which heightened concerns about disruptions to oil supplies in the Gulf. Brent crude futures rose to nearly $109 a barrel, marking a 7.7% increase, amplifying worries about inflation and potential interest rate hikes. The market reaction underscored investor anxiety over the potential for prolonged conflict and its impact on global economic growth. Energy stocks were mixed, with TotalEnergies rising 3% due to higher oil prices, while other major firms like STMicroelectronics, Schneider Electric, and Societe Generale fell between 3.6% and 3.7%. Broader market segments also saw declines, with companies such as Legrand, ArcelorMittal, and BNP Paribas losing 2% to 3%. The defense sector remained relatively unaffected, though some firms like Thales and Eiffage posted modest gains. Meanwhile, economic data showed a narrowing of France's state budget deficit to EUR 32.1 billion for January-February 2026, down from EUR 40.3 billion in the same period the previous year, reflecting improved fiscal conditions. However, the immediate market focus remained on geopolitical risks and their implications for global economic stability.