(BFM Bourse) – After falling nearly 2.6% in mid-morning, the CAC 40 significantly reduced its losses on Monday but still ended in decline of 0.82%, investors fearing that the expansion of the Omicron variant does not cause activity restrictions that may affect growth.
Is the traditional “end of year rally” threatened or has it only intervened, like last year, a month in advance? As a reminder, the CAC 40 had recovered more than 20% – nearly 1,000 points – in November 2000, driven by the development of vaccines, before this rebound dulled in December of the same year after the discovery of first variant -Alpha- in the United Kingdom. This year, the threat changes its name but the pattern remains the same. After the anthological “rally” that took place in November when a wind of optimism was blowing about the economic recovery, which took the flagship index of the Parisian market to a new historic peak, the latter is once again struggling. since the beginning of the month.
Already fallen at the end of last week (-0.93% in weekly performance), the enthusiasm of the operators was still noticeably withered on Monday, the logical result of the market environment. This remains in fact “fragile, mixed with concerns about rising inflation that central banks seek to contain and a virus that threatens to overwhelm global health systems”, summarizes Michael Hewson, analyst at CMC Markets. In the morning, the dropout of the CAC 40 even came close to the panic zone, the drop approaching -2.6% around 10:20 am. However, the flagship index then reversed some of its losses, to finish at 6,870.10 points (-0.82%). Down compared to Friday, where the passage of the “four witches” had as always boosted activity, volumes amounted to 3.86 billion euros, which remains high especially for the last fortnight of the year civil.
Omicron, the Fed and Joe Manchin
If the first announcements on this subject were rather reassuring, the exceptional contagiousness of the new strain of the coronavirus still forces several European countries to impose new restrictions, and lowers the morale of operators. “The lockdown announced in the Netherlands will heighten fears that similar measures will be adopted in other European countries in the coming weeks,” writes Lee Hardman, analyst at Mitsubishi UFJ Financial Group. Uncertainty now hangs over what other European countries very affected by Omicron could decide, including the United Kingdom and Italy.
“Under the paving stones, the mud”, worries the strategist of the Banque Postale Asset Management Hervé Goulletquer. “The information on the front of the epidemic remains poor – the number of cases reached or is close to the peaks in the main European countries and the hospital tension is increasing. We must continue to adjust the short-term outlook, qu ‘it’s about growth or price,’ he explains.
Operators’ nervousness is further fueled by the more restrictive bias adopted by the Fed last Wednesday in order to stem inflation, the rise in consumer prices (over one year) having reached levels unprecedented for 40 years in November in the States -United. Relieved by the awareness of the institution at first, the markets are now worried about the end of the unwavering support of the central bank, and the consequences of future rate hikes.
“Investors also take a dim view of the fact that US Democratic Senator Joe Manchin rejected the nearly $ 2,000 billion tax and spending package” of the gigantic social reform plan planned by Joe Biden, reports his side John Plassard, deputy director of investments at Mirabaud. Citing in particular the rise in prices and the extent of the debt, the elected representative of West Virginia declared “not to be able to vote for that”. Which sounds a priori the death knell for this huge project – the Senate is, as a reminder, perfectly divided between Democrats and Republicans, so the slightest defection tilts the balance.
Umpteenth swing in favor of values-Covid
In this context of a marked increase in risk aversion, only a handful of CAC stocks have survived, including obviously Eurofins Scientific, still sought after (+ 2.6%) when the pandemic is gaining in force, and Hermès, which has rebounded from 1.2% after dropping more than 6% on Friday. BNP Paribas was also able to brave the general decline, the bank having announced that it had reached an agreement with BMO Financial Group for the sale of 100% of its commercial banking activities in the United States operated by its subsidiary Bank of the West, for a price total of $ 16.3 billion in cash. What to collect 0.45%.
On the other hand, it was Worldline (-6.7%) which lost the most, and many stocks suffered significant declines, notably Stellantis (-4.1%), Renault (-3.2% ) and ArcelorMittal (-3.2%) /
The same goes for the SBF where a few “Covid-compatible” stocks have won the favor of investors (+ 1% for Sartorius Stedim Biotech, + 0.6% for bioMérieux) when the vast majority see red. Ipsen (-7.3%) and Genfit (+ 7.4%) each stepped up their movement on Friday in reaction to the announcement of their global partnership, including in particular an initial payment of 120 million euros from the first to second.
Real estate companies (4% for Carmila, -2.7% for Mercialys) and oil services companies (-2.8% for Vallourec, -3.9% for TechnipFMC) were particularly neglected, the latter suffering from the new sharp decline in prices oil (-5% for a barrel of Brent to 69.89 dollars at the end of the day) induced by the restrictions imposed in Europe. TotalEnergies limited its decline to -0.7%.
After months of negotiations, the European leader in leisure residences Pierre & Vacances reached an agreement in principle with its creditors allowing it to be bailed out, subject to a significant dilution for its current shareholders, which hardly changed the course ( + 0.15% in still very low volumes). Solutions 30 (-5.2%) reacted more to the announcement of the departure, just nine months after joining the group, of the “Chief Transformation Officer” responsible for accelerating the implementation of actions to strengthen management processes. governance, risk management and controls. By the way, the firm is postponing “to the first half of 2022” the implementation of these procedures initially planned “before the end of the year” 2021.
On Forex, the single currency rebounded 0.51% to 1.1296 dollars after its bout of weakness on Friday. In addition, bitcoin was not immune to the resurgence of risk aversion (-0.85% to 46,344 dollars).
Guillaume Bayre – © 2021 BFM Bourse