(BFM Bourse) – The Parisian index ended down 0.38% on Friday, linking a fourth session of decline. The market had a rough week, marked by disappointing Chinese indicators and a rise in bond yields triggered by surprisingly restrictive Fed minutes.
The Paris Bourse has put an end to a tough week. The CAC 40 ended Friday’s session down, admittedly quite modest, by 0.38% to 7164.11 points, but which brings its weekly decline to 2.4%.
The bad news piled up over the week. The market was penalized on Monday by fears over the financial difficulties of the Chinese property developer Country Garden Holdings, which suspended negotiations on several of its bonds, even if the experts agree that the risks of contagion remain for time limited. Thursday evening, Evergrande, another real estate developer in the country, recalled the bad memories of investors by declaring itself bankrupt in the United States, to protect its American assets from creditors before a financial restructuring.
Then it was disappointing Chinese economic activity indicators (industrial production, retail sales, household loans) that gripped the market.
>> Access our exclusive graphic analyses, and enter into the confidence of the Trading Portfolio
To these fears on the situation of the second world economy has been superimposed, since Wednesday evening, the rise in bond yields. The 10-year US Treasury bond rate notably returned to levels not seen since 2007. Even if a slight lull was observed on Friday.
This rise in yields (and therefore a fall in the value of bonds, which move inversely to rates) was caused by the “minutes”, i.e. the minutes, of the last policy meeting monetary policy of the US Federal Reserve (Fed). This document showed that the members of the American central bank were worried about the risks on inflation, not excluding further tightening of monetary policy.
The “Perfect Storm”
“The markets are hit by the perfect storm: rising interest rates, deteriorating economic data in China, lack of liquidity during the summer and a buyers’ strike”, summarizes Barclays.
Rising bond yields will heighten market attention to the Jackson Hole symposium, a sort of big central bankers’ get-together the Fed will be hosting late next week, with remarks from its chairman, Jerome Powell.
“The continued rise in long-term Treasury yields to their highest level since before the financial crisis amid heightened expectations of an economic re-acceleration creates a challenging backdrop ahead of the speech. Fed Chairman Jerome Powell in Jackson Hole next week,” Capital Economics said.
Luxury in the hard during the week
“All eyes will be on how Fed officials, including Chairman Powell on Friday, react to the strength of the economy and inflation risks ahead of the Sept. 20 meeting,” Deutsche analysts say. Bank.
As for values, luxury, a sector with high valuations and sensitive to the macroeconomics, has to deal with both fears about China and the rise in interest rates, which is weighing on growth stocks.
This Friday, LVMH lost 1%, L’Oréal 1.1%, Kering also 1.1% and Hermès 0.7%. Over the week as a whole, LVMH lost more than 5%, Kering more than 4.7%, L’Oréal more than 3.4% and Hermès more than 3.2%.
Spie (-1.7% on Friday) announced a new targeted acquisition by buying the German BridgingIT.
On other markets, the euro lost 0.02% against the dollar on Friday at 1.0873 dollars while oil contracts are gaining ground. The October contract on Brent North Sea rose 0.2% to 84.27 dollars a barrel while that of September on WTI listed in New York advanced 0.4% to 80.66 dollars a barrel.
Julien Marion – ©2023 BFM Bourse