Could this be the end of the rally on the Paris Bourse? After three consecutive sessions of increase, a cumulative gain of 3.1% and two thresholds crossed, that of 7,200 points and that of 7,300, the Cac 40 stopped its march forward. The index retroceded 1.72%, to 7,249.66 points, in a volume of business totaling 4.34 billion euros. Across the Atlantic, the Dow jones loose 0.33%. The market seems to have caught up with the reality, that of interest rates. The US Federal Reserve (Fed) released the conclusions of its last monetary policy meeting on December 15 on Wednesday evening.
What about the Fed’s balance sheet?
Its members considered that it might be justified to increase the rates of Fed funds earlier than expected or at a faster pace, especially if Omicron puts upward pressure on inflation. ” Rising housing costs and rents, more widespread wage growth driven by labor shortages and prolonged global supply-side tensions, which could be exacerbated by the emergence of the Omicron variant “, Estimates the monetary institution. A speech more “hawkish” than expected, which weighs on the equity markets. It does, however, benefit the dollar. The greenback rose to 1.13 against the euro. Forex traders mostly reacted to the possibility that the Fed would start reducing its balance sheet at the first rate hike. In the last cycle, it allowed almost two years to elapse between the first hike and the start of its balance sheet reduction.
Since the onset of the health crisis, the amount of financial assets held by the Fed has more than doubled, reaching nearly $ 8.8 trillion. That is almost 10 times the amount for December 2008. ” With a balance sheet now much larger than it was in 2014, during the previous peak, and much stronger economic conditions, it makes sense that quantitative tightening will be faster. “, Judges Paul Ashworth, chief economist United States for Capital Economics.
Techs at the bottom of the table
The slight increase in weekly registrations unemployment, to 207,000 against 195,000 expected, and the decline in the ISM services index from 69.1 to 62 in December are not helping matters. ” We are now entering a period where good data is bad as it feeds the hawks of the Fed, and bad data is bad too, because it can’t fuel the Fed’s doves », Said Ipek Ozkardeskaya, senior analyst at Swissquote this morning.
Growth stocks, technology is paying the price for the prospect of rate hikes. In Paris, the titles Capgemini, Dassault Systèmes and Teleperformance lost between 3.65% and 4.37%. At the European level, the Stoxx 600 of technology fell by 2.8% and shows the largest sectoral decline. Conversely, the banks have gained ground.
Luxury players, which represent a quarter of the capitalization of the flagship index, also weighed, with declines from 3% to 4.7% for LVMH, Hermes, Kering and L’Oreal.
ALD puts the turbo
In the retail industry, rumors about crossroads (+ 6.29%) are becoming more and more insistent. After Bloomberg, the daily The echoes reports that Auchan is considering a 100% cash offer at 23.50 euros per share, against 21.50 euros on the first attempt. An amount which, according to Bryan Garnier, should ” very probably »Be accepted by the shareholders.
Dassault Aviation took 3.01%. In 2021, the aircraft manufacturer received 49 orders for its Rafale fighter jet and 51 for its Falcon business jet. This figure does not include aircraft destined for the United Arab Emirates, with which Dassault Aviation signed a contract at the end of the year.
ALD Automotive distinguished itself by soaring by 8.35%, in first position of the SRD. Societe Generale’s long-term vehicle rental subsidiary will acquire its Dutch competitor LeasePlan for an amount of 4.9 billion euros.
Conversely, Coface dropped 10.3%. Natixis sold all of its 10% stake for 174 million euros, or 11.55 euros per share.
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