(BFM Bourse) – Somewhat schizophrenic, the markets first welcomed the more restrictive than expected bias adopted by the Fed in order to contain inflation before changing their minds, in particular abandoning “growth” stocks sensitive to future rate hikes. Hermès dropped 6% on Friday.
The Hangover. After celebrating (a little too much?) Thursday, the day after the Fed, the measures announced by the American central bank to counter inflation, the Parisian market was groggy on this Friday called “the four witches”. Date which corresponds to the simultaneous quarterly expiration of several types of futures contracts (on equities, indices, options on indices and options on equities), traditionally inducing an increase in volatility. This was confirmed again this Friday, the CAC 40 having opened close to equilibrium before dropping more than 120 points until giving up 1.72% around 4:20 p.m., then regaining a little ground to limit its decline to – 1.12% to 6,926.63 points, in a very rich trading volume of 8.2 billion euros.
At the end of a hectic week full of major macroeconomic events, the CAC 40 thus posted a negative weekly performance (-0.93%) – at the end of its best week (+ 3.34%) since March.
The Parisian market followed in the footsteps of the main New York indices, which finished in the red Thursday, particularly the Nasdaq Composite (-2.5%). The latter is also struggling to bounce back on Friday (+ 0.4%) and is heading for its worst week since February, just like the S&P 500 (-0.2% around 5.30pm). The Dow Jones, which had limited its decline to -0.1% Thursday, yielded for its part of 0.9%.
While the less accommodating bias adopted by the world’s main central banks (we can even say downright more restrictive when it comes to the US Federal Reserve, which announced three rate hikes coming next year and as many in 2023 ) was ultimately taken on the safe side by investors, considering that giving up on combating accelerating inflation would be the worst monetary policy mistake, disappointing economic data from Germany cooled the atmosphere in the morning on European markets.
Inflation close to 5% in the euro zone
The business climate index in Germany calculated by Ifo fell to 94.7 points in December, from 96.6; thus translating a “darkening of the sentiment of German companies for Christmas”. A signal of weakness for the German economy which comes against a backdrop of persistent inflationary pressures, Eurostat having just confirmed that inflation reached 4.9% year on year in the euro zone in November.
Luxury weighed heavily on the trend, Hermès notably dropping 6.1% at the close after posting more than 2.5% increase around 9:30 am. LVMH also fell by 2%. Banks (2.2% for Société Générale, -1.6% for Crédit Agricole) and car manufacturers (-2.2% for Stellantis, -1.3% for Renault) also suffered sharp declines.
Suffering from the brutal cold snap in the American technology sector, Capgemini, STMicro and Dassault Systèmes respectively yielded 1.4%, 1.3% and 1.1%.
Airbus is doing well and climbs 1.7% after Air France-KLM’s firm order for 100 A320neo, with an option on 60 more aircraft, but Thales (+ 1.8%) shows the best performance of the flagship sample. Vinci shareholders see the share price nibble 0.3%, while the firm has announced the cancellation of treasury shares equivalent to 1% of the capital. Worldline signs the best performance of the flagship index this Friday with a gain of 3.8%.
Genfit is at the party
Outside the flagship index, the biotech Genfit is celebrating (+ 41%) after a license agreement on its elafibranor molecule with the Ipsen group. The latter will pay 120 million euros immediately to the Lille biotech, and potentially up to 480 million, for the rights of this experimental treatment of primary biliary cholangitis. In addition, Ipsen will acquire 8% of the capital of Genfit via a capital increase valuing biotech 350 million euros. Ipsen, for its part, fell by around 1.5%.
The proposed acquisition of the South African company Permoseal (one of the leaders in adhesive solutions for wood, packaging, construction and DIY) allows Arkema to nibble 0.2%. The acquisition by Rubis of 80% of Photosol France, an operation aimed at accelerating the group’s transition to renewable energies, is more warmly welcomed: the specialist in the storage of petroleum products finally climbs by 4.7%.
The restructuring of the capital of CNP Assurances (La Banque Postale taking over a 16.1% block from BPCE) does not result in any movement in the share.
Oil is also suffering with a 2.1% decline in the European benchmark Brent to $ 73.4, wiping out the gain sparked Thursday by the EIA’s announcements on the weekly level of US stocks, suggesting unprecedented demand (23, 2 million barrels per day for the week ended 10). In terms of currencies, the euro declined 0.50% to 1.1276 dollars, after having rather progressed, in a surprising way, since the last announcements of the Fed (until a peak of the month at 1.136 dollars on Thursday). Bitcoin was not spared and dropped 1.7% to $ 46,800.
Quentin Soubranne – © 2021 BFM Bourse