The year 2022 is not starting in the best possible way for the French market. The Paris Bourse ended sharply down 1.44% on Monday, in the red for the third consecutive session since a publication showing the willingness of the US Federal Reserve (Fed) to tighten its monetary policy. The flagship CAC 40 index lost 103.71 points to 7,115.77 points. On Friday, it had fallen 0.42%. Since its closing peak reached last Wednesday, the Parisian rating has lost 3.5%. On Monday, it attempted a rebound which quickly ran out of steam, before widening its losses after the opening of the US markets.
In the absence of new macroeconomic data, “it is again the theme of the rise in rates” which has imposed itself in the minds of investors, observes Yohan Salleron, equity manager of Mandarine Gestion. This new environment, after years of low interest rates, materialized a little more with the publication on Wednesday of the minutes of the monetary policy meeting of the American Central Bank (Fed). It has shown itself to be more resolute in its fight against inflation, which reached a record level in 40 years in November in the United States.
A possible reduction in the balance sheet
The Fed plans to make four key rate hikes – today at a historically low level – instead of the three previously anticipated. Above all, the institution could also reduce its balance sheet, that is to say start selling part of the assets that it has bought for 18 months to support prices in the face of the health crisis. This signal pushed rates on the bond market, which had already been trending upward since the end of December: the yield on the ten-year American sovereign loan returned to a pre-Covid level, at 1.80%.
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In France, the trend is similar. The ten-year OAT is now at 0.28%, close to its post-crisis highs. This new environment, traditionally not very favorable for equities, does not have the same effects on companies depending on the sector. So-called growth companies, whose development benefits from long-term “visibility” because they are less dependent on economic activity, suffer more than cyclical stocks, “whose investment horizon is shorter” , explains Mr. Salleron.
Among the growth stocks are the technological or luxury sectors. They have clearly progressed since the crisis and fears “are also conducive to profit taking”, continues the manager. The release of US inflation figures for December is expected on Wednesday. “In the event of an upside surprise, sentiment will be strengthened and sector rotation can continue,” he warns.
Atos collapses, a big contract for Thales
Tech stocks suffered further losses. Worldline lost 5.36% to 48.71 euros, Teleperformance 4.14% to 363.70 euros and STMicroelectronics 4.39% to 42.43 euros. The IT group Atos tumbled 16.82% to 32.10 euros, sanctioned for presenting preliminary financial figures for 2021 below its targets. Luxury also suffered, like Hermès who lost 5.08% to 1,374.00 euros. Second best performance in 2021, the stock is the third worst since the start of 2022, with more than 10% losses.
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Thales share took 1.63% to 78.78 euros after a contract with the French Air Force worth 1.5 billion euros over ten years, according to corroborating sources. Cyclical values still on the front. Banks, favored by a hike in rates, and industrial stocks such as automobiles, have once again held up better. Crédit Agricole gained 0.54% to 13.53 euros, while Societe Generale fell only 0.56% to 33.02 euros. The two banks are in the top five stocks at the start of the year, along with Unibail-Rodamco-Westfield (+ 1.41% to 66.91 euros on Monday) and Renault (-0.61% to 34.03 euros).