CAC 40: How to prepare for a stock market crash?

The CAC 40 collects a magnitude shock. In a few sessions, the Parisian index has sold more than 6.5 %, carried away by a shattering return of trade tensions. Donald Trump's announcement of new customs taxes on Chinese and European imports sparked a wave of massive sales. Thus, on April 3, the Paris Stock Exchange fell 2.25 %, a sign of a generalized climate of nervousness which awakens the spectrum of a world economic war.

Luxury and industry in turmoil: giants hit hard

On Wednesday, April 3, European markets suddenly won, led by the announcement of a widespread increase in customs duties by the Trump administration. In Paris, CAC 40 sold 2.25 % in session, and fell to 7681.5 points, in a climate marked by a strong risk aversion.

Since its historic peak from the end of last February at more than 8,257 points, the CAC 40 has now lost just over 6.5 %. This decline is mainly linked to the impact of trade war on European multinationals, particularly exposed to exports.

The values ​​of luxury and the automobile, pillars of French stock market performance in recent years, have been the first sanctioned.

Here are the main impacted values:

• Kering: -30 % in one month, the highest drop in CAC 40 and SBF 120;
• LVMH: -16.5 %, affected by profits;
• Hermès: -11.5 %, victim of his exposure to international markets;
• Stellantis: -17 %, hit hard by the new customs barriers;
• Forvia: -18.5 %, due to globalized supply chains;
• Valeo: -16.5 %, also penalized by the domino effect of the automotive sector.

This withdrawal is part of a global dynamic of disengagement vis-à-vis the values ​​strongly exposed to globalization, at a time when protectionist tensions are resettled.

The intensity of the correction Also questions the structural robustness of these titles, so far carried out by global growth today called into question. The Frankfurt, Milan and Zurich scholarships have recorded similar declines, which confirms the extent of the phenomenon on a continental scale.

Tensions on ETF and strategic prudence: what room for maneuver for investors?

While the major industrial capitalizations collapse, another problem strikes the portfolios: the tumble of the ETF shares. Indeed, the ETFs which reply the indices such as the CAC 40 or the S&P 500 have recorded spectacular drops in the wake of the “black Monday” of April 7.

That day, the CAC 40 dropped by 6.8 %, the Dax by 5.75 %, and the Nasdaq had already sold almost 9 %the previous week. In such a climate, panic is watching, but the experts invite you to keep a cool head.

“Do not sell at the bottom” is the first advice given by professionals. Statistics are clear: miss the best ten days of a market drastically reduces the annual performance of a portfolio. This is a weight argument for those who are considering a precipitated liquidation.

In this perspective, Several solutions emerge. First, diversification remains a solid rampart. Defensive bond or sectoral ETFs (health, basic consumption, energy) are cited as an alternative. ETFs backed by gold or equals, where each company has the same weight in the index, also help to mitigate volatility.

Experts also insist on the interest of reassessing assets in terms of their “Just value” And to take an interest in solidly financially or which pay dividends, more resilient during periods of uncertainty.

Beyond technical solutions, this crisis recalls the fragility of a strategy that is too concentrated in some sectors or indications. If the current shock is brutal, it could open a window for those who will identify unjustly sanctioned values ​​or intelligently reposition their exposure. The question now is whether USA-China's commercial tension will fade, or if this new protectionist cycle will settle in the durably.