In the stock market, this is called entering a “correction zone”, when an index begins to lose more than 10% compared to its last high. In the case of the Cac 40, the last peak corresponds to the level of 7,384.86 points on January 5 of this year. As for the 10% drop, they were reached very precisely on Tuesday morning, when the flagship index plunged by more than 2%, reacting to Russian announcements the day before concerning Ukraine. Based on the lowest session of 6,633.74 points, recorded in the very first exchanges, the Cac 40 lost exactly 10.1%. The index ended stable (-0.01%, at 6,787.60 points), in a supplied volume of 4.7 billion euros.
Sales time has logically come for the stock exchangers, awaiting news from the Ukrainian front. Yesterday evening, Vladimir Putin, in the context of a televised address, recognized the independence of two separatist regions in eastern Ukraine, those of Luhansk and Donetsk. The Russian President also said that ” if Ukraine joined NATO, it would pose a direct security threat to Russia “. Finally, on Tuesday, Parliament gave authorization to the Kremlin to be able to deploy troops in the Donbass.
Make the situation critical to negotiate?
” If the latest developments look like the harbingers of an invasion – and they may well be – they could also be deliberate attempts to make the situation even more critical and force the [différents protagonistes] to enter into serious negotiationsaccording to Craig Erlam, at Oanda. As things stand, investors seem hopeful that this is the case and as long as Russia continues to seek a diplomatic solution and troops remain on the correct side of the border, investor interest in any downward move will be maintained “.
Some investors also hope that Russian intervention will remain confined to the two separatist regions. In this hypothesis, Western sanctions should remain limited, believes Holger Schmieding, economist at Berenberg. Sanctions that are expected today from the European Union and the United States. Joe Biden will speak this evening, at 8 p.m. French time, on the situation in Ukraine. Germany has already suspended the authorization granted to the Nord Stream 2 gas pipeline designed to transport natural gas from Russia directly to Europe via the Baltic.
On Wall Street, it was time for recovery, after a three-day weekend due to the Presidents’ Day holiday. With, as a result, a slight decline in the major indices, in particular the Dow Jones (-0.91%), weighed down by the drop of nearly 8% in Home Depot. The distributor specializing in DIY and home furnishings exceeded expectations in the fourth quarter, but the new fiscal year will be less dynamic, in terms of sales and profits, due in particular to increases in the price of raw materials and components.
Concerning these raw materials precisely, the persistent tensions on the geopolitical front pushed oil prices a little higher this morning, which came close to the 100 dollar mark for the Brent benchmark, a level not seen since September 2015, before returning on the 96.6 dollars at the end of the day.
Worldline star of the day
On the equity markets, the largest falls of the day logically return to the companies most exposed to Ukraine and sanctions against Russia. It is, for example, the second market of Renault (-3.7%), main shareholder of the local manufacturer Avtovaz. Danonealso present in the country, lost 1.3% while Societe Generale still dropped 1%.
Conversely, the biggest rise of the day can be attributed to a publication of annual accounts, that of Worldline, which jumped more than 10%. The payment solutions specialist had an excellent end to the year, in terms of both sales and margins, and the forecasts are up to expectations. Now that the payment terminals inherited from Ingenico are well on the way to being sold, the lights are green on the stock market for Worldline, considered to be highly undervalued by analyst firms.
Edenred climbed 4.6%. The business services group’s growth topped 12% in the fourth quarter despite an environment still hampered by the pandemic.
Ubisoft gained 5.1%. The title of the video game publisher is an opportunity to ” growth at a reasonable price “, according to Citi analysts. Those in Benchmark moved from “sell” to “hold” emphasizing that recent moves in the sector provide a valuation floor.