Quick overview

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French stocks experienced a significant surge as investors expressed optimism that Prime Minister Sebastien Lecornu’s new government would successfully navigate the upcoming no-confidence votes.

The positive market momentum was also bolstered by strong earnings from LVMH Moët Hennessy Louis Vuitton SE, which reported an unexpected return to growth in sales during the third quarter.  The benchmark CAC 40 Index reached its highest level since April, reflecting a 2% increase.

LVMH, along with competitors Hermes International SCA and Kering SA, saw its stock rise by up to 13%, contributing to half of the CAC 40’s early morning gains on Wednesday. A Barclays Plc index tracking stocks most exposed to domestic risks in France also saw a 2.5% increase.

The CAC 40 index needed this boost since it has lagged behind regional peers such as Spain’s IBEX 35 and Germany’s DAX this year. Factors such as LVMH’s strong earnings and positive political developments contributed to improved investor sentiment. Both Chinese luxury demand and political unrest have negatively impacted French stocks, making France the least favored European market according to the October Fund Manager Survey by Bank of America Corp.

Following Lecornu’s success in securing the crucial support of the Socialist Party in France’s National Assembly, investor confidence has grown, significantly increasing the likelihood that his new government will survive two no-confidence votes scheduled for Thursday.

Lecornu’s proposal to suspend a pension law that raises the retirement age—an essential condition for the Socialists’ backing—prompted the party, which holds significant power in the lower house of parliament, to announce that they would not vote to unseat his fledgling administration this week.