The control room of Euronext, a company that manages the Paris Stock Exchange, in La Défense, November 21, 2019 (AFP / Archives / ERIC PIERMONT)
The Paris Bourse ended sharply down 1.72% Thursday, blaming the change in tone of the US Federal Reserve which is heading towards the implementation of a stricter monetary policy.
The flagship CAC 40 index lost 126.71 points to 7,249.66 points. The day before, it had finished up 0.81%, hitting an all-time high during the session and at the close.
Despite this decline, which began at the opening, the Parisian rating remains clearly in the green over the week, at 1.35%.
The publication of the minutes of the last meeting of the US Federal Reserve dampened the enthusiasm of European investors in early 2022.
“What is striking is the change in tone of the Fed. Now, it is suggesting four hikes in its key rates, by 0.25%, instead of three. In addition, it is no longer talking about slowing down the rate. pace of its asset repurchases on the markets, but to lower its balance sheet, “and therefore sell it, Xavier Girard, expert in financial investments at Milleis Bank, told AFP.
These discussions took place in mid-December, during the last meeting of the Fed, but their content had not been relayed so clearly by the president of the institution Jerome Powell.
“There was undoubtedly a desire to be progressive. Even when the markets are partially prepared like yesterday, there was a stir,” explains Mr. Girard.
The US economy is showing signs of overheating, with inflation at its highest for decades, but also a tighter labor market, which puts pressure on wages.
Rising key rates is one of the means commonly used to lower the thermometer, even if it means reducing economic activity.
This policy also has the effect of driving up interest rates on the bond market. “Since December 21, the American rate for 10-year loans has gone from 1.40 to 1.73%, while that for France has gone from -0.01% to + 0.26%”, illustrates Mr. Girard.
Even though rates are still very low, this change has implications for the types of preferred shares investors prefer.
Tech and luxury tumble, the bank is smiling
Big winners since the start of the pandemic, tech and luxury goods have been the most handicapped.
Hermès fell 4.62% to 1,504.50 euros, LVMH 4.08% to 727.10 euros, Kering 3.06% to 718.10 euros, these three stocks having a preponderant weight in the CAC index 40.
Capgemini fell 4.37% to 203.30 euros, Dassault Systèmes 3.65% to 48.69 euros, and Téléperformance fell 4.08% to 378.10 euros.
On the other hand, the rise in rates on the bond market was doing the business of the banks.
Societe Generale, which offered LeasePlan for 4.9 billion euros in long-term car rental, took 1.86% to 32.85 euros. The operation would be carried out via its subsidiary ALD (+ 8.35% to 14.28 euros).
BNP Paribas gained 1.36% to 64.19 euros and Crédit Agricole 1.15% to 13.24 euros. Financial Axa also took 0.70% to 27.25 euros.
In addition, the slightest concerns about the dangerousness of the Omicron variant continued to penalize health stocks (Eurofins Scientific -1.74% to 98.69 euros) and favored industrial companies (Renault + 0.38% to 34.13 euros) .
The large distribution group Carrefour did even better than the day before, taking 6.29% to 18.34 euros while new rumors about an attempted takeover by Auchan seemed credible to investors.
© 2022 AFP
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