The CAC 40 is moving higher this week, supported by optimism around a peace agreement
that aims to end the conflict with Iran and restore stability in the region.
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A major driver of this rebound is the expected reopening of the Strait of Hormuz, which has led to a sharp
drop in oil and gas prices. This easing in energy costs has directly improved market sentiment, especially in European equities.
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According to LBP AM, if energy prices remain at current levels, inflation could quickly fall by around
0.5 percentage points, which would significantly ease pressure on consumers and central banks.
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However, the situation remains uncertain. Negotiations between Donald Trump and Iran are expected
to continue until August to confirm the broader details of the agreement, especially regarding Iran’s nuclear program.
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Despite doubts about the long-term stability of the deal, markets are currently reacting positively,
as investors welcome any scenario that reduces the risk of economic disruption linked to energy supply shocks.
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That said, analysts also warn that the transmission of lower energy prices into inflation is not guaranteed,
as second-round effects could still keep inflation elevated if expectations remain high.
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One thing is clear:
the CAC 40 is benefiting from short-term optimism driven by falling energy prices, but uncertainty
around the durability of the Iran agreement continues to keep investors cautious.
