The Paris Bourse was returned to its levels at the end of December. This Monday, the Cac 40 erased its gains at the start of the year by losing 1.44% to 7,115.77 points, moving further away from its records of mid-last week, now almost 4% apart. The leading Parisian index aligns a third session of decline in a row. The mood has changed since the publication on Wednesday evening of the minutes of the last monetary policy meeting of the Fed, that of mid-December. The US central bank has warned that not only could it raise interest rates faster than expected, but it has also signaled that the balance sheet will be reduced as early as this year, i.e. two years ahead of schedule hoped for by the Stock Exchange. The employment figures, released on Friday, which showed an unemployment rate that fell below 4% and upward pressure on wages, only confirmed the argument that the US economy is now quite strong. to stand on its own two feet.
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Monetary policy has returned to the center of investor concerns. In this context, the publication scheduled for Wednesday of the latest inflation figures in the United States makes them nervous. Economists expect a further surge in consumer prices in the world’s largest economy, even sharper than the increase in November (+ 6.8%), the largest in nearly forty years.
On the secondary debt market, interest rates were still on the rise on Monday, while, on the equity side, so-called growth companies, such as those in the “tech” sector, suffered the blow. The yield on the ten-year American bond rose to over 1.8%, its highest level since January 2020. It was 1.51% at the end of 2021. In the euro zone, where December inflation reached 5 % in December, the highest in twenty-five years, according to figures released last week, German debt securities of the same maturity are on the way to turning positive again, which would be a first for nearly three years.
German ten-year rate soon positive
“There is still a lot of aggressiveness [monétaire] to be included in asset prices and this could cause sales on the markets this week, and more particularly on growth stocks which should feel the effects of higher rates, compared to value ”, warns Ipek Ozkardeskaya, senior analyst at Swissquote.
Goldman Sachs and Deutsche Bank expect the Fed’s monetary policy normalization to accelerate with four tightening this year, one more than in December. “We continue to anticipate rate hikes in March, June and September, and we are now expecting another one in December, for a total of four in 2022”Goldman Sachs strategist Jan Hatzius wrote in a note. He further estimates that the Fed should begin the process of reducing its balance sheet, which reached $ 8.8 trillion in December, from July, if not earlier. For now, the market estimates the probability of four rate hikes this year at 50%. Investors could also have a new light on the Fed’s strategy with the hearing on Tuesday of Jerome Powell by the Senate Banking Committee as part of his appointment to a second term at the head of the central bank. That of Lael Brainard, for the post of vice-president, will follow Thursday.
Atos misses its targets for 2021
Technology stocks, which have benefited from a zero interest rate environment over the past two years, are the most affected. On Wall Street, the Nasdaq Composite drops 2%. At European level, the associated sector index fell by more than 3%. In Paris, STMicroelectronics, Worldline and Teleperformance are among the biggest drops in the Cac 40.
Atos, which left the Paris index in September, plunged by 17% after having once again missed its targets for 2021. The IT services company reported unaudited 2021 turnover of around 10.8 billion euros, down about 2.4% at constant exchange rates when the group said it expected stable revenues. In addition, the operating margin stood at around 4% in 2021, against a target of around 6%.
Conversely, among the biggest increases in SRD, the video game publisher Ubisoft gained more than 4% following the announcement of the takeover of Zynga by Take-Two.