(BFM Bourse) – The Paris Stock Exchange barometer had a particularly trying week, stunned by the shock linked to Emmanuel Macron’s decision to dissolve the National Assembly. Political risk is an integral part of the challenges that investors must deal with. A look back at sessions that put the nerves of Parisian investors to the test.
The markets have a holy horror of uncertainty. And this week was no exception. From Monday, investors took a sudden leap into the unknown after Emmanuel Macron’s decision to dissolve the National Assembly. A first since 1997. The tenant of the Elysée announced it on Sunday evening following the results of the European elections, which recorded the very clear victory of the National Rally in France.
This decision took political observers by surprise. The market too, since it lost more than 2.3% from the opening on Monday before containing its decline to 1.35% at the close. The Paris Stock Exchange barometer was shocked by this surprise announcement. But in 36 years of existence (the CAC 40 was officially launched on June 15, 1988), the flagship Parisian index has experienced much more testing sessions, marked by high volatility induced by political uncertainty. To the great despair of market observers.
Friday June 24, 2016 (-8.04%): the Brexit vote
The Paris Stock Exchange experienced a real “black Friday”, experiencing its worst session since October 2008. After opening slightly late and down almost 5%, the CAC 40 quickly sank until it lost more than 10% “intraday”, before a slight jump at the end of the afternoon. It is the victory of “Brexit” at the end of the referendum which causes a tsunami on all world stock markets.
Coming back to the CAC 40, its fall was amplified by the sharp rebound in the market at the start of the week (+6.5% between Monday and Thursday) linked to polls favorable to “Bremain”. The disappointment of investors therefore matches the expectations and optimism that have reigned on the financial markets for several days. In Paris, financial stocks, reserved for decline at the start of the session, were literally crushed: -20.6% for Société Générale, -17.4% for BNP Paribas and -14% for Crédit Agricole.
The next day, the Paris barometer had again conceded 2.97%, further affected by the divorce between the United Kingdom and the European Union.
Wednesday June 9, 2016 (+1.49%): the election of Donald Trump
The year 2016 was clearly marked by elections, and… surprises. On November 9, 2016, investors took note of the surprise victory of Republican candidate Donald Trump, against his Democratic rival Hillary Clinton, who was predicted to be the winner until the last hours before the election result.
On the stock market, Asian markets were the first to welcome, not without great excitement, the announcement of the result of the election in the United States. In Tokyo, the flagship Nikkei 225 index plunged 5.36%. In Paris, the CAC 40 had sunk below the threshold of 4,400 points, down 2.83% from the opening.
For Pierre Schang, manager at Amilton Asset Management, “the election of Donald Trump is a real surprise and takes us back to what we experienced when the Brexit result was announced.” However, according to the manager “even if the arrival of Donald Trump at the head of the United States implies an increase in the risk premium on the markets, the Republican will have to deal with Congress and therefore adopt less radical postures “.
But this shock wave gradually lost force as the day progressed. In the end, the flagship Parisian index ended against all expectations up 1.49%, managing to take philosophically the accession of Donald Trump to the supreme position.
“This decline remains relatively contained compared to that post-Brexit, we cannot speak of a crash but rather of a purge,” had even noted Alexandre Baradez, market strategist at IG Markets in reaction to the election of Donald Trump.
Our overview now takes us to much more distant times: to a period when the world was divided in two, in the summer of 1991.
Monday August 19, 1991 (-7.29%): coup d’état in the USSR
During the “Moscow putsch”, Mikhail Gorbachev was ousted by “hardliners” within the Communist Party. The spectacular drop in the CAC 40 (-7.29%) was, however, short-lived since the level preceding this fall had been regained in four sessions. Stock markets in Asia and the Pacific were the first to react to the news of the overthrow of the Soviet president. The reaction was all the stronger as no comments accompanied this news and it therefore lent itself to all possible speculation. An influx of sell orders then overwhelmed traders and rumors about the death of the Soviet number one accentuated the trend, in a panic-stricken market.
Since its creation in 1988, the CAC 40 has suffered steeper declines than those cited in this article. The last major fall dates back to Monday March 9, 2020. The Paris Stock Exchange barometer literally collapsed, dropping 8.39% at the close, weighed down by the spread of the coronavirus and the price war on the oil market. . The worst session, however, remains Monday October 6, 2008 (-9.04%) after the bankruptcy of Lehman Brothers.
Sabrina Sadgui – ©2024 BFM Bourse