French Stocks Surge as ECB Rate Hike Fails to Derail Market

The French stock market defied expectations and rose 0.78% on Friday, as investors digested the European Central Bank's second interest rate hike of the year. The CAC 40 index closed at 8,179.77 points, with cyclical and tech stocks leading the advance.

Automaker Stellantis surged 3.10% to close at 4.68 euros per share, while aerospace and defense giant Safran added 2.55% to end at 330.20 euros. Semiconductor manufacturer STMicroelectronics climbed 2.37% to 44.68 euros.

The ECB's decision to raise interest rates was widely anticipated by market participants, but it underscored the central bank's commitment to combating inflation pressures linked to ongoing geopolitical tensions in the Middle East. The ECB staff now expect headline inflation to average 3.0% in 2026, moderating to 2.5% in 2027 and 2.1% in 2028.