CAC 40

CAC 40 brokers allow traders to gain exposure to the 40 largest companies on France’s leading exchange. The index tracks the economic performance of one of the most influential European countries, making it an exciting asset to trade. Airbus, L’oreal and Total Energies are just some of the major CAC 40 players. The index has a total market cap of just over £2 billion, rivalling other major European indices like the FTSE 100 and DAX 40.

In this guide, we will explore how to compare CAC 40 brokers, how the index works and how you can profit from its volatility and growth. We have also compiled a list of our top recommended brokers with access to the CAC 40 below.

How To Compare CAC 40 Brokers

Instruments

The CAC 40 is a popular index to trade amongst UK investors because of its high international exposure and exciting movement. As such, many brokers offer tradable CAC 40 assets. These include futures, options, ETFs, structured products and funds. Along with this, you can also invest in the stocks and shares that make up the CAC 40 (such as Renault or AXA).

For example, Interactive Brokers UK allows for the trading of CAC 40 options or futures contracts, while IG supports CAC 40 futures, CFD trading and spread betting.

Trading Platforms

The trading platform is what you use to open and close positions with your CAC 40 brokerage. Therefore, this is an incredibly important factor when choosing a firm. There is a multitude of different platforms available, including popular tools like MetaTrader 4, MetaTrader 5 and TradingView, as well as many bespoke software packages built by the brokers themselves.

Finding a platform that offers all the tools and features you require will be essential for successfully implementing your strategies and earning profits. Among these will likely be technical indicators, copy-trading functionality, AI automated trading, social investing, time frame ranges, one-click trading, order types, mobile trading compatibility and interface customisation. Indicators like the moving average and stochastic oscillators can be very useful when trying to predict future CAC 40 values.

TradingView CAC 40 & EUR/USD Comparison

Our experts recommend you test a platform by opening a demo account. These allow you to invest with virtual money using the broker’s platform, letting you get accustomed to it and its features.

Research And Education

The FR 40 consists of forty of France’s largest companies. As such, lots of research will be required to stay on top of the major players’ actions and predict the movement of the index. Top CAC 40 brokers will provide clients with the research tools to accomplish this. Such tools include relevant news articles, professional analyst recommendations, economic calendars and price analyses.

Less experienced traders may also require educational resources to learn how to invest successfully. The best CAC 40 brokers will provide resources such as platform guides, key term glossaries, forums, explanatory videos, asset trading basics, etc.

Trading Fees

Different CAC 40 brokers have different fee structures. Some may charge subscription fees to access advanced features, while others may have zero commissions on trades. Deposit and withdrawal fees and spreads may also differ and can have a significant impact on your take-home. Finding a broker that offers the features you want with a fee structure that minimises costs is important to maximise profits.

For example, IG has spread ranges of 1.0 to 4.0 points on its CAC 40 futures contract with no account charge.

What Is The CAC 40?

The CAC 40 is a French benchmark stock market index, built to represent the 40 most significant stocks among the largest 100 market caps on the Euronext Paris exchange. The asset is a price return index, meaning it represents the capital appreciation of the constituent stocks.
The asset’s name comes from the Paris Bourse’s early automation system, Cotation Assistée en Continu. The base value of 1,000 was set on 31st December 1987, which was equivalent to 370,437,433,957.70 French Francs (roughly £50 billion).

What Is The CAC 40 Used For?

The CAC 40 gives a general idea of the level and direction of the Euronext Paris stock exchange. It gives a snapshot of the French stock market performance and indicates its overall economic health. However, because of the international nature of many of the companies listed (e.g. Renault, AXA, Michelin, etc.), it is debatable whether this is a true indication of France’s economic health. 45% of the CAC 40’s listed shares are owned by foreign investors.

Generally, the index reacts predictably to major economic events affecting France and the Eurozone. This is shown by the big 42.68% fall in 2008 because of the global financial crisis and the 7.68% drop because of the effects of Covid-19 in 2020.

Those looking to speculate on the FR 40 can do so by investing in several different exchange-traded funds (ETFs). Some of the more popular ETFs include Lyxor ETF CAC 40 (CAC), EasyETF CAC 40 (E40) and DBXT CAC 40 (X40) and can be traded via most of the top CAC 40 brokers. Other viable assets include funds, futures, options and structured products.

How The CAC 40 Works

Weighting

The CAC 40 is a capitalisation-weighted index. This means that it is impacted more by companies with greater market capitalisation than those with less. In particular, the companies chosen are the 40 with the most significant values out of the 100 with the largest market capitalisations in the Euronext Paris exchange. The market caps are decided in terms of liquidity on the exchange.

The index weightings of companies are capped at 15% at each quarterly review. However, the weightings range freely with underlying share prices.

CAC 40 Changes

Selection for the CAC 40 index composition is reviewed every quarter by an independent Index Steering Committee. At the review dates, companies on the Euronext Paris are ranked according to free float market capitalisation and share turnover over the last year. The forty chosen companies must create an index such that it is a relevant benchmark for portfolio management and is a suitable underlying asset for derivatives products.

Buffer Zone

Out of the 40 companies making up the CAC 40, the 35 highest-ranking companies are selected and a buffer zone is created between the 36th and 45th highest-ranking companies. Incumbent constituents of the CAC 40 take priority over those not in the index but the buffer zone does allow for movement in and out of the list, depending on performance.

Points To Remember

Below are some important CAC 40 facts and stats. Keep these in mind when investing with CAC 40 brokers:

• Company weightings are capped at 15%
• The index began in 1987, with a base value of 1,000.00
• There was a closing high of 7,376.37 on 5th January 2022
• The largest single-year rise was in 1988 with a 57.39% rise
• The was an intraday high of 7,384.86 on 5th January 2022
• The largest single-year fall was in 2008 with a 42.68% drop
• Most leading CAC 40 brokers are regulated and highly trusted
• There has been an average return of 7.74% between 1991 and 2023
• The underlying index is open from 08:00 to 16:30 GMT, Monday through Friday
• Operation shifted from total market capitalisation to free float-adjusted market capitalisation in 2003
• The exchange only trades in euros (CAC 40 brokers will usually provide accounts with the base currency of euros)

Why Trade With CAC 40 Brokers?

The CAC 40 is composed of France’s largest companies and stocks, with the index accounting for more than 80% of the total market cap of the CAC All-Tradable. France’s economy makes up around one-fifth of the European economy, showing its significance as a global economic power. As such, the FR 40 is an exciting index to invest in and trade.

Choosing A CAC 40 Asset

CAC 40 brokers allow you to invest in the index via several different asset types. While you can trade the individual assets making up the index, you can also trade structured products, options, futures, funds and exchange-traded funds (ETFs) that track it.

Trading the compositional assets of the CAC 40 will require specific industry and company knowledge, such as CEO changes, to speculate effectively. On the other hand, investing in the index through other means may require greater overall economic knowledge. Understanding and predicting the economic health of France and the European Union will be of utmost importance to maximise your profits.

The asset type you choose to use should depend on the type of investing you would like to perform and your risk appetite. Would you like to directly expose yourself to the index through futures or predict price action with options? Would you rather take a diversified approach through ETF or fund trading? Before choosing which asset class you want to take advantage of, these are the questions you need to ask yourself.

Different brokers will give traders access to different instruments, so make sure the firm you choose offers your desired instruments.

Biggest Players

So who are the most impactful players in the CAC 40 index? Below is a list with the weightings of the top 10 most influential companies included.

• LVMH – 11.73%
• TOTALENERGIES – 9.17%
• SANOFI – 6.83%
• L’OREAL – 6.09%
• SCHNEIDER ELECTRIC – 5.10%
• AIR LIQUIDE – 4.70%
• AIRBUS – 4.01%
• BNP PARIBUS ACT.A – 3.70%
• VINCI – 3.42%
• ESSILORLUXOTTICA – 3.36%

The full, up-to-date CAC 40 stock list can be found on the Euronext website.

Key Indicators

As with stocks, there are a vast number of factors that affect the performance of the CAC 40. Of course, the political and economic situation in France is very influential but, outside of that, the European Union and other nearby economies (like the UK) can have a strong impact. Major trading partners and world powers (e.g. USA and China) will also have a noticeable influence on the index’s value.

You will want to pay attention to these countries’ overall performances through their GDP and inflation stats, employment and unemployment levels, interest rates, political activity (including elections) and other key metrics.

For example, the recent Covid-19 pandemic beginning in 2020 had a major impact on the CAC 40 index, causing a fall of 7.68% in 2020 alone. However, the strong recovery efforts put in place by France and the EU have led to huge growth in the index, with a 28.85% increase in 2021.

Strategies

There is a vast array of investment strategies available to those looking to extract profits from the price movements of the FR 40. There is no perfect winning strategy that works for every available asset and person, though there are many formulae that can be found through exploration and practice. Here, we will cover a couple of the more popular strategies that have the potential to earn profits when applied effectively.

Moving Average Strategy

The moving average strategy is a popular technical indicator trading system that looks to smooth out index value data by calculating the average values over set periods. Doing so filters out noise from short-term fluctuations, highlighting the trend direction. The considered periods can be adjusted to whatever you like, allowing this strategy to be used by traders of all time frames.

Simple and exponential moving averages can be used to find trend reversal signals, allowing the prediction of a change in trend direction and facilitating effective position management.

CAC 40 Simple Moving Average Demo

Fundamental Trading

Investing via fundamentals requires strong levels of research and economic analysis to predict future movements by reading reports and articles. Information is key when trading, especially an index made up of many different stocks. To effectively use fundamental analysis, you will need to have a quick, reliable information stream providing you with news updates and reports on each of the constituent assets of the CAC 40 and any external factors. Using the information you obtain, you will need to apply economic analysis to predict how the news updates will affect the index’s value.

Bottom Line On CAC 40 Brokers

CAC 40 brokers provide access to a popular, exciting index with a strong correlation with the European and global economies. Switched-on investors can take advantage of both the domestic French and international economic and political situations to earn a profit. Given the significance of the index, many brokers in the UK support regulated, secure investment in the Euronext Paris asset, whether via CFD, ETF or options contract. Check out our list of the best UK CAC 40 brokers.

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