What Is the CAC 40 Index and How Can You Trade and Invest in It?

The company operates the world’s most liquid exchange group, with nearly 4,000 listed companies, representing a total market capitalization of approximately $30.5 trillion. You can also trade CAC 40-linked ETFs or fund shares using our bdswiss forex broker review derivative products to speculate on price movements. When trading, it’s better to do so on the index directly to trade the real price, which has lower spreads, higher liquidity, and longer market hours. As the benchmark index for the French market, the CAC 40 is one of the biggest European stock markets, hence it’s one of the most important national indices of the pan-European stock exchange group, Euronext. The CAC 40 index is used as a benchmark of how the French market is performing. As one of the major stock indices in Europe, it’s a useful indicator for traders and investors.

• Unlike the Euro STOXX Index, the CAC 40 is made up almost exclusively of French companies.
• It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
• CAC 40 (which stands for Cotation Assistee en Continu or “continuous assisted trading”) is used as a benchmark index for funds investing in the French stock market.
• Click the link below and we’ll send you MarketBeat’s list of ten stocks that will drive in any economic environment.
• Real estate, by contrast, is the smallest segment which is fairly typical of indexes such as these.

He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. Sign up for MarketBeat All Access to gain access to MarketBeat’s full suite of research tools. Here are the current sectors that are part of the CAC 40 Index with their current weighting. As you can see, the Industrials sector is the largest in terms of percentage taking up nearly one-quarter of the index. Real estate, by contrast, is the smallest segment which is fairly typical of indexes such as these.

The CAC 40 is the French equivalent of the Nikkei (Japan), the Hang Seng (Hong Kong) and the Dow (United States). The index tracks 40 of the largest French stocks based on their market capitalization on the Euronext Paris. The CAC 40 represents a capitalization-weighted measure of the 40 most significant values among the 100 highest market caps on the exchange. The index is similar to the Dow Jones Industrial Average (DJIA) in that it is the most commonly used index that represents the overall level and direction of the market in France.

The components of the index are found on Euronext, the cross-border European stock exchange. CAC 40 (which stands for Cotation Assistee en Continu or “continuous assisted trading”) is used as a benchmark index for funds investing in the French stock market. The index is also used to give investors a snapshot of the broader market conditions of the Euronext Paris, which is the largest stock exchange in Paris. While most of the companies listed on the CAC 40 consist of France-based corporations, the index comprises of the most multinational stocks in comparison to other European markets. This means that you’ll find approximately 45% of the listed stocks owned by foreign investors.

Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.

Trade or invest in CAC 40 ETFs

The CAC 40 currently includes such well-known companies as L’Oreal, Renault, and Michelin. An independent steering committee reviews the CAC 40 index composition quarterly. At each review date, the committee ranks companies listed on Euronext Paris according to free float market capitalization and share turnover in the previous year. Forty companies from the top 100 are chosen to enter the CAC 40, and If a company has more than one class of shares traded on the exchange, only the most actively traded of these will be accepted into the index.

Euronext was created in 2000 from the merger of the Amsterdam, Brussels, and Paris stock exchanges. In 2007, Euronext completed their agreed merger with the New York Stock Exchange (NYSE) Group, resulting in the formation of NYSE Euronext. The CAC 40 index represents the 40 largest equities listed on the Euronext Paris in terms of liquidity, and includes such companies as L’Oreal, Renault, and Michelin.

News in other languages: CAC 40

This means that the market fluctuates very quickly, presenting you with the opportunity to buy and sell the index Best investment opportunities in the short term. The CAC 40 is a market-cap weighted index of 40 of the 100 companies with the highest market cap on the Euronext. In this way, the CAC 40 closely approximates the Dow Jones Industrial Average. That is like the Dow in the United States, the CAC 40 is the most commonly used index to analyze the overall level and direction of the French market.

What is the CAC 40 Index?

However, buying stocks directly on the Euronext exchange may have tax implications, currency risks along with other risks. ADRs come with their own set of risks, primarily liquidity risks when compared to buying the individual security. The CAC 40 is one of the main national indices of the cross-border European stock exchange, Euronext.

With us, you’ll choose between trading the CAC 40 price with our France 40 offering or investing in France 40-linked ETFs and stocks. If you have a long-term outlook, you can also get exposure to the index by investing in individual stocks or ETFs. You can also follow the what is swing trading index as France represents a large portion of the European economy. Investors can choose to invest directly in any of the individual components of the index using American Depository Receipts (ADRs) or by simply purchasing the stock directly on the Euronext Paris Exchange.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.

The name is derived from its value being updated every 15 seconds from Monday to Friday between 9am and 5.30pm. The index peaked during the dot-com bubble soaring up to a peak of nearly 7,000. However, it fell after that and hit around 3,000 during the economic crisis of 2011. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.

You can trade via the spot price, which is closest to the underlying price with low spreads, but includes overnight fees. Alternatively, you can trade via futures contracts, which have wider spreads but no overnight fees. With spread bets, you’ll trade the France 40 by betting a certain amount per point movement in the underlying’s price.