Thirty years after its first listing, the CAC 40 has carved out its place among the most powerful indexes in the stock market world. As the main Paris stock market index, it comprises the 40 most important stocks of the French economy.
This year, the CAC 40 has been in a precarious place, and has been subject to bounces and unstable values due to various factors.
In this special report, you will find a complete analysis of the CAC 40, including its movements and variations, that will be of use to your future investment projects.
The CAC 40 is relatively healthy despite the impact of the Covid-19 crisis on the economy. Despite the pandemic, the Paris Stock Exchange index is maintaining a respectable position in the world ranking.
Since the extension of the state of health emergency in France, positioning has become difficult, especially since concerns are focused on survival and scientific research. The CAC 40, like all European indexes, is therefore in a state of stagnation never before encountered.
2021 is a suspenseful time for investors. While January is usually a good month for the stock market, this year took a different turn. Investing in the CAC 40 has improbably become a risk for potential traders. There is no need to feel guilty about this, as the reason is the same on all continents. Moreover, it’s unavoidable, given free-falling prices of many stock market assets in the last two quarters of 2020.
The time has now come for the Paris Stock Exchange to rebound in favor of the French economy. The objective is to position itself in reference to American and European statistics, a move supported by the economic recovery plans of shareholder companies. The majority of the stakeholders of the CAC 40 index have adopted this position, with the exception of a few companies that have managed to keep their values constant, mainly financial and oil companies.
Variations, including rises and falls in the CAC 40, come from trading based on supply and demand. The index is measured in points, which can vary according to its own movements in the stock market. It can therefore lose points at any time, regardless of its performance in the percentages. However, the effects of stocks on the index may not be similar. Some stocks with higher capitalizations are more likely to have a greater impact on the CAC 40. For other stocks, the effects are less alarming.
The CAC 40 quotation changes every 30 seconds. No wonder, as it is a very powerful and influential stock market index. Its value can change constantly and requires non-stop monitoring by investors. Thus, a rise noted at such or such hour can in a fraction of second turn to a fall. However, it should be noted that the CAC 40 has a good chance of being a good investment. Indeed, the relatively beneficial values of the index largely precede it.
While the CAC 40 had its moments of glory in 2019, 2020 has been an investor's nightmare. The reason was the economic and health crisis affecting the entire world. The CAC 40 fell by 40% in the middle of the crisis, especially during the long periods of lockdown. Businesses in all sectors came to a virtual halt for a long period, plunging the French economy into a state of total disarray.
The stock market crisis did not only affect the French economy, it also spread to other parts of the world. Last year, the Dow Jones in the United States, the Nikkei 225 in Japan, the Shanghai Composite in China, as well as other indexes of major countries, also experienced stock market instability. The Chinese economy, for example, was completely turned upside down. This was to be expected, given that China was the country of origin of the Covid 19 pandemic.
2020 took a toll on the French stock market sector. To recover, the French index developed a successful strategy from November onwards to increase its share price by more than 20%. This was made possible in particular by the development of the first vaccine against the coronavirus, a long-awaited event.
According to analysis, this is the second time since its creation that the CAC40 stock market index has been so successful. However, this increase in performance is not yet a reason to invest capital, at the risk of making bad investments. Indeed, the current situation does not yet allow you to opt for a stable recovery solution or to take advantage of CAC 40 stocks.
Despite a favorable last quarter for the stock market and the CAC 40 index, we cannot claim victory and are not yet out of the woods. The health crisis is still a threat to be closely monitored by stock market shareholders. The appearance of different variants of Covid 19 is another complicating factor to be taken into account. Although France has a high rate of vaccinated people, the effectiveness of this solution remains to be seen.
The year 2021 will then hold unforeseen events that should be analyzed in advance, at least as long as the current situation remains uncontrollable.
The CAC 40 is one of the most active indexes on the stock market, and investing can be very beneficial. You’re probably wondering "How can I invest in the CAC 40 index? ». It’s not a question of taking the term « investment » literally and investing capital: trading is done on the FRA 40. We will shed a little more light on this subject in the following steps:
When you want to invest in the CAC 40 index, the first step is to find a broker or stockbroker. This term refers to an intermediary between the financial markets and the investor. Their role is to manage your account and trading profile. The broker will take care of buying or selling for you.
The services of a broker are important for all those who want to have a place in the stock market. The intermediary receives a commission as a reward for the services they offer. It is also possible not to use the services of a broker and to launch yourself into the world of trading at your own risk.
To find the right stockbroker, it is essential to consider the following points:
There are no fixed fees in the stock market: brokers’ fees vary from case to case. While some offer fairly competitive prices, others charge exorbitant rates.
The stock market industry is undergoing considerable change and related online services can be subject to scams.
When choosing the best broker, you should therefore take into account the level of security and reliability of the platform.
3. The products offered
A broker does not only carry out tasks related to trading. They can also offer products such as shares, or the convertible currency market, known as forex.
▪ Create a stock account
Once you have chosen the ideal stock broker, it is time to open an account. The steps to follow vary according to the platform, but in general, you will need to provide some information and fill in some forms. The creation of a stock market account is a simple process, you just have to follow the steps announced on the platform of your choice.
To begin, you must register by providing your identity and personal information. You will then be asked to insert a scan of your ID and a proof of address as confirmation. Note that some platforms offer easy registration by synchronizing with a Google or Facebook account.
When opening a trading account, you will also be asked to complete a short questionnaire once you have registered. This is to determine exactly what category you fall into, from your knowledge of the stock market to your experience in the field, including details of the investment project you intend to make.
▪ Make your first deposit
As part of the procedures for creating a trading account, the first deposit is a crucial step. After you are done with ID verification and the questionnaire, you will indeed have the chance to invest for the first time. The minimum amount to credit to your account depends entirely on the platform. For some, a deposit of 100 euros is enough, while for others, you will need to deposit at least 500 euros. You will then be asked to select the currency and follow a few payment steps depending on the desired method.
To make a deposit on a stock exchange account, you can use several means, depending on the compatibility with the platform. In any case, you can make the transfer from recognized sites like Skrill, PayPal, Rapid Transfer or Neteller. Classic methods such as bank transfer or credit card payment are also popular.
▪ Consult the index interface
Now that you are a stock market investor, you will have access to the indexes interface where you can follow movements and evolutions in real time. You’ll find several graphs and quotations that will have to learn to interpret correctly. It’s here that you’ll find the FRA40, which is the reference index of the CAC40 for trading.
▪ Choose the indexes
To invest in the CAC40 (FRA40), you will now have to select it among many other well-known indexes. Click on it to start trading.
▪ Trading on the FRA 40 index (CAC 40)
When you select and click on the CAC 40 index, you will be presented with a chart of movements. You can then start trading, either to sell or to buy. This is where you will insert an amount to invest, as well as the stop loss. The stop loss is a limit to which you can refer to close your position in order to stop a loss.
Managing your losses allows you to avoid the risk of damaging your initial capital. You can then stabilize your trading without fear of a significant price drop impacting your position.
