(BFM Bourse) – The CAC 40 continues its slide and loses more than 1% this Wednesday evening. Chinese growth has disappointed investors, when comments from central bankers rule out the prospect of a reduction in key rates from the Fed in March.
The Paris Stock Exchange is still suffering, posting a third session in the red. The CAC 40 closed down sharply by 1.07%, but managed to preserve the threshold of 7,300 points at 7,318.69 points, after an incursion below this level to 7,281.1 points at the start of the afternoon.
The euphoria that animated the stock markets at the end of the year is now giving way to doubts. Market questions about future rate cuts from major central banks and weak Chinese growth are now undermining investor morale.
More and more members of the main central banks are trying to calm high market expectations for rapid rate cuts. Speaking to Bloomberg from the Davos economic forum, Christine Lagarde, the president of the European Central Bank (ECB), blew hot and cold a bit this Wednesday. Although she considered a rate cut by the summer “likely”, the central banker also warned that the market’s optimistic expectations of key rate reductions were not helping the ECB fight inflation.
“We believe that there are downside risks in the short term, as the markets may consider that there are too many reductions (rates, editor’s note) too soon,” HSBC’s Europe strategists warned in a note this Wednesday.
“We believe the ECB will leave rates unchanged at its January meeting, in line with consensus expectations. Furthermore, we also think it is unlikely that the Governing Council will make further monetary policy announcements at its January meeting”, continue the Nomura economists.
Rising rates
In the bond compartment, rates continue to rise after Christine Lagarde’s comments. The 10-year German government bond is reaching 2.28%, while that of France with the same maturity has accelerated upwards to 2.81%, returning to 3-month highs.
This morning, investor morale was already at half mast after deteriorating statistics on the Chinese growth front. The latter reached 5.2% last year, exceeding the government’s target of 5% but falling to its lowest level since 1990.
“On a quarterly basis, the economy grew by +1.0% (vs. +1.1% expected) in the fourth quarter, representing a slowdown from the revised pace of +1.5% in the previous quarter” , also points out Jim Reid of Deutsche Bank.
“The outlook for 2024 remains uncertain, with the world’s second-largest economy still facing the current real estate crisis, deflationary pressures and low consumer and business confidence,” adds the establishment.
OVHcloud featured, Game Over for Ubisoft
On the securities side, the stocks most exposed to China were at the forefront of these concerns, including luxury. Kering lost 3.5%, LVMH lost 2.8% and Hermès limited its decline to 0.8%. Pernod Ricard (-1.2%) and Rémy Cointreau (-1.1%) also had a difficult session on the Paris Stock Exchange.
Worldline contained its decline to 0.1% while the payments group is considering, according to Reuters, developing a strategy to reassure its shareholders and avoid any hostile takeover.
This is not the case for Ubisoft, which lost 5.7%, undermined by unenthusiastic coverage initiations from design offices, and suffering from a certain nervousness before the publication of the third quarter of fiscal year 2023-2024, on February 8.
Conversely, OVHcloud jumped 5.4%. The market appreciated the ambitions for the 2025-2026 financial year (which will therefore close at the end of August 2026), which the company delivered this Wednesday during a day dedicated to investors in London.
On the small and mid-cap side, Esker ended down 1.7% after having delivered its order intake and its turnover for the whole of 2023.
On other markets, the euro lost 0.2% to 1.0857 dollars. Oil is weighed down by weak Chinese growth. The March North Sea Brent contract lost 1.4% to $77.156 per barrel, while the February contract lost 1.2% to $71.68 per barrel.
Sabrina Sadgui – ©2024 BFM Bourse