(BFM Bourse) – After starting the week on the right foot thanks to the rebound in luxury goods, the Paris market suffered this Tuesday from the new ebb in growth stocks, under the effect of the continued rebound in government bond yields, especially the American 10-year-old. Investors are also keeping an eye on oil and certain annual publications.
As futures suggest another very upset open on Wall Street (-1.3% for the S&P and up -1.9% for the Nasdaq 100 at this point) coming out of a long weekend , European investors are also cautious about the surge in bond yield fever. This even results in fairly pronounced profit-taking since the CAC 40 returns 1.03% to 7,127 points around 1:15 p.m., pulled down by growth stocks. “The European indices should open lower this morning under the pressure of the rise in the price of a barrel of oil which returns to its 2014 level and the increase in the yield of the 10-year American which reaches its pre-pandemic level” anticipated rightly Mirabaud investment specialist John Plassard in his morning note.
Government bond rates are already stretching significantly in the face of investor uncertainty about the intentions of the Fed, which will hold its next monetary policy meeting next Tuesday and Wednesday. The fears shared by some observers of an even more pronounced tightening than expected propels the yield on US two- and 10-year Treasury bills to highs since the start of 2020, at more than 1% and 1.83% respectively. The German 10-year government bond rate is again close to the symbolic threshold of 0%.
Brent and WTI at their highest since 2014, TotalEnergies since March 2019
At the same time, oil prices are accelerating their rise and returning to highs since 2014, driven by supply disruptions, which is fueling investors’ fears of persistently high inflation. This increase in the prices of the main crude references nevertheless benefits TotalEnergies, which has reached a peak since March 2019 thanks to a gain of 1.3% at 1:30 p.m. – enough to take the lead in the list of the flagship index. Schlumberger (+2.9%) or CGG (+1.5%) are also continuing their rebound.
Investors are also awaiting the publication of new annual results. After those mixed of JP Morgan or Citigroup at the end of last week, it is the turn of Goldman Sachs and Bank of America to comply with the exercise this Tuesday.
The technology sector pulls the CAC 40 down
In Paris, this new season of publications is starting very slowly, with only those from Catana, GenSight Biologics and Spineway being on the agenda today. Before the pace gradually picks up as of Thursday, the rankings essentially highlight sectoral trends and it is the technology compartment that bears the brunt of the new tensions in the bond market on Tuesday. Around 1:40 p.m., Worldline lost 3.8%, Teleperformance lost 2.4% and Dassault Systèmes 2.3%. Luxury heavyweights are not spared (-2.2% for Kering and L’Oréal, -2% for LVMH), and other growth stocks such as Eurofins (-2.2%) are also neglected. In addition to TotalEnergies, Thales and Bouygues resisted with respective gains of 1% and 0.9% at mid-session.
Elsewhere, Sodexo climbed 1.1% after sources told Reuters private equity fund Bain Capital said it was considering a stake in the catering specialist’s benefits and rewards business looking for investors who could help finance the group’s recovery. SMCP, on the other hand, fell by 1.3% after announcing the appointment of Christophe Cuvillier (ex-URW) as chairman of its board of directors. Orange limits its decline to 0.3% despite the passage of Goldman Sachs to sell the title, while the new governance of the telecom operator is becoming clearer.
Among the smallest values, the French pioneer of cellular therapies intended to treat vision diseases GenSight Biologics plunged 16%, the FDA encouraging the biotech to conduct an additional trial in order to strengthen the demonstration of the effectiveness of its treatment. Atari’s half-year accounts are also poorly received (-4.5%), the strategic reorganization undertaken by the group towards premium games and blockchain-related activities having led to a sharp widening of the operating loss between April and September 2021 .
Finally, on Forex, the single currency returned 0.18% against the greenback, at 1.1388 dollars shortly after 1:50 p.m.
Quentin Soubranne – ©2022 BFM Bourse