France’s HCOB Composite PMI for February printed at 49.9, above the 49.6 forecast.
Even so, a reading below 50 still signals an overall fall in business activity. The latest figure suggests conditions are closer to stabilising than expected.
French PMI Near Stabilisation
France’s February composite PMI rose to 49.9, slightly above our 49.6 forecast. That is a mild positive surprise. However, it remains below 50.0, the level that separates contraction from expansion. In other words, the slowdown may be easing, but it has not yet turned into growth.
This could give French equities a short-term boost. With the CAC 40 trading near 8,150, selling out-of-the-money put spreads may be one way to earn premium while taking a cautiously bullish view. This strategy caps risk if the market does not rally.
After the weak performance seen through much of 2025, this is one of the clearest signs so far this year that the economy may be nearing a bottom. It also fits with recent Eurostat data showing industrial production stabilised in January 2026, rising 0.2% month over month. Together, these data points support the idea that the worst of the contraction may be over.
Slightly stronger data from France, a key Eurozone economy, could also support the euro. More importantly, it may ease pressure on the European Central Bank to cut rates in Q2, a move markets had begun to price in. As a result, short-term rate futures could shift toward a slightly more hawkish ECB outlook.
Implied volatility on CAC 40 options has fallen recently, with the VCAC index dropping to a three-month low of 14.5. Lower volatility generally makes options cheaper. Since the PMI is still in contraction territory, buying protective puts into any rally may be a sensible hedge in case the rebound fails.
Option Volatility And Hedging
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