French stocks recorded their worst year in decades in 2024, but a closer look at the market’s long-term performance reveals an even more sobering trend, particularly when compared to the U.S. market.
“The S&P 500 is up 24% from the April 7 low,” wrote Mike Zaccardi, a certified financial analyst. “France is up 18% in the last 25 years,” he added, referring to the country’s benchmark CAC 40 index.
The S&P 500 is up 24% from the April 7 low.
undefined Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) June 7, 2025
France is up 18% in the last 25 years. pic.twitter.com/RGwKXkFxq5
Zaccardi was highlighting the stark underperformance of the CAC 40, which tracks the 40 largest French companies by market capitalization on the Paris stock exchange.
The index has gained just 18% since its peak in August 2000, at the height of the dot-com boom, underscoring how sluggish its long-term growth has been.
Recent investor concerns around French stocks center on political instability, persistently high inflation, and waning foreign investment.
The CAC 40 is also heavily concentrated in a few key sectors, such as luxury goods and financial services, making it particularly vulnerable to sector-specific downturns.
Compared to other EU nations, France has faced steeper borrowing costs, putting pressure on companies that rely on debt to fund growth and operations.
Historically, the CAC 40 has lagged behind other major European indexes, particularly after the 2008 global financial crisis. Its closer ties to the French domestic economy and broader EU trends have made it more susceptible to regional economic shocks and fluctuations.
French stocks in 2025
The CAC 40 index has posted a modest gain of over 5% since the start of 2025, recovering from the sharp April sell-off triggered by the Trump-led trade war. Despite the rebound, the index remains slightly down over the past 12 months.
At times during 2025, French stocks — and European markets more broadly — outperformed their U.S. counterparts, marking the first sustained period of relative strength since 2000.
However, analysts remain cautious about the outlook. As Morningstar’s Valerio Baselli noted, European markets still face significant headwinds in matching U.S.-style returns.
“Structural concerns around innovation gaps and complex regulatory frameworks endure,” Baselli wrote.
“Overcoming entrenched inefficiencies remains critical for long-term convergence prospects,” Baselli added, referring to Europe’s ability to keep pace with U.S. markets.
On the economic front, France continues to lag in growth. GDP expanded by just 0.1% in the first quarter, driven primarily by rising company inventories ahead of expected tariffs.
Government economists said the inventory spike offset weak underlying demand and exports.
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