(BFM Bourse) – After 4 sessions in the red, the Paris market offers an exceptional rebound of 7.13% this Wednesday, against a backdrop of the first positive signals towards a possible peace between Ukraine and Russia, a easing of commodity prices and -massive- purchases on good terms.
If an investor who has not followed the news of the day only looks at the variation of the CAC 40 at the close, he might think that the war is over as the performance is so spectacular: +7.13%, i.e. the 10th best daily performance of the index since its creation in 1987 and its biggest rise since that of November 9, 2020, when the hope born of the Pfizer vaccine had led to a jump of 7.57%. However, this is not the case, the fighting still raging in Ukraine at a time when the Parisian market closes its doors on a sensational rebound, induced by the combination of a massive return from investors on discounted stocks and a brief lull in energy prices, following new historic records (gas) or nearly 15 years old (oil). By taking 425 points on the session of the day, the barometer of the tricolor market offers itself a record on this side.
“It is most likely a dead cat bounce” (or “dead cat bounce” according to the still very bestial market jargon, designating a brief recovery in a bearish context over time, editor’s note), judge Craig Erlam, analyst at Oanda, who therefore believes that today’s session is only a “temporary corrective movement”. “The invasion is still ongoing, the sanctions are still being imposed, the oil prices are still high […] None of this is conducive to a sustainable stock market recovery.”
A first step towards peace?
Nevertheless, the markets did not remain insensitive to the first signs of detente observed on Wednesday, between Kyiv and Moscow. On the Ukrainian side, President Zelensky says he no longer wants to insist on obtaining NATO membership for his country, one of the issues that officially motivated the Russian invasion of his country, while saying he is ready for a “compromise” on the status of separatist territories. A change in position that could fuel the discussions scheduled for Thursday in Antalya, Turkey, between the Russian Foreign Ministers Sergei Lavrov and Ukrainian Dmytro Kuleba, with their Turkish counterpart Mevlüt Cavusoglu as mediator.
Especially since, during a press conference this Wednesday, the spokesperson for Russian diplomacy Maria Zakharova, in turn, seemed to reduce the conditions set until then by the Kremlin in its talks for a peace. “Negotiations are underway with the Ukrainian side in order to end the senseless bloodshed and resistance of the Ukrainian Armed Forces as soon as possible […] Some progress has been made,” she said. And adding that Russia’s goals “do not include the occupation of Ukraine, the destruction of its state, or the overthrow of the current government.” It’s not much but it’s already a lot, given the inflexibility demonstrated until then by the Kremlin, Vladimir Putin having in particular qualified the Ukrainian president on several occasions as a “Nazi” and a “drug addict”, while posing his eviction as another preliminary to possible negotiations.
Strong rebound in sanctioned stocks since the start of the war
These first positive signals allow investors to begin to see a positive outcome to this armed conflict, and massively bring them back to the stocks that have suffered the most since the beginning of the conflict. Namely in the first place the flagships directly exposed to Russia, such as Société Générale (+11.5%), Alstom (+9.3%) or Renault (+11.1%).
The ranking is even completely reversed compared to the trend of recent weeks, the rare stocks having largely benefited from the geopolitical situation (armaments and energy sectors in particular) being the only ones in the red on Wednesday. We are thinking in particular of Thales (-4.2%) and Dassault Aviation (-5.5%), but also of several oil services stocks, such as the refining specialist Esso (-14.2%), that of prospecting Schlumberger ( -5.7%) or the equipment manufacturer Vallourec (-3.9%).
In the other direction, other notable rebounds should be highlighted, starting with those of Faurecia (+17.2%) and Valeo (+13.5%), which suffered greatly – like the entire automotive sector – for several weeks – Stellantis (+ 11.9%) and Michelin (+ 9.8%) also benefit. Investors are also massively returning to buying the banking compartment (+10% for BNP Paribas, +9.1% for Crédit Agricole), as well as other neglected stocks (+12.3% for Veolia, +10 .5% for URW). LVMH (+9.6%) and Airbus (+9.5%) – to name but a few – are also offering convincing rebounds.
Oil ebbs the day after the embargo
In terms of oil, the prices of the main references fell back on Wednesday after their mad rise in recent days, culminating in the embargo decreed on Tuesday by the United States and the United Kingdom against Russian oil and gas. In the wake of the White House announcement, Ukrainian President Volodymyr Zelensky said he was “grateful to the United States and to the leadership” of Joe Biden for this “blow to the heart of Putin’s war machine “- and prices jumped to more than 130 dollars, levels not seen since 2008. While gas prices are on their side reaching heights never reached before, the Minister of Economy Bruno Le Maire estimated on Wednesday that the The current energy crisis is “comparable in intensity and brutality to the oil shock of 1973”. Around 6:10 p.m., however, the prices of the world crude oil benchmarks, Brent and WTI, fell significantly compared to the previous day, the first trading at 119.6 dollars (-6.5% compared to the previous day) when the second is trading at 116.6 dollars (-5.7%).
On the Forex, or currency market, the single currency sharply accentuated its rebound started the day before and recovered 1.49% against the greenback, at 1.1065 dollars.
Quentin Soubranne – ©2022 BFM Bourse