The Paris Bourse ended sharply down 1.72% Thursday, blaming the change in tone of the American 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, he had finished up 0.81%, hitting an all-time high in session and close.
Despite the fall, which began as soon as it opened, the Parisian rating remained clearly in the green over the week, at 1.35%.
The publication of the minutes of the last meeting of the American Federal Reserve dampened the enthusiasm in which European investors were bathed for the first days of 2022.
What is striking is the change in tone of the Fed. Now, it suggests four hikes in its key rates, 0.25%, instead of three. In addition, it is no longer talking about slowing the pace of its asset repurchases on the markets, but lowering its balance sheet, and therefore selling it, explains AFP Xavier Girard, expert in financial investments at Milleis Bank.
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 in decades, but also a tighter labor market, which puts pressure on wages.
Raising key rates is one of the ways commonly used to bring down the thermometer, even if it means reducing economic activity.
This policy also has the consequence 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% + 0.26%, illustrates Mr. Girard.
Even if rates are still very low, this change has consequences for the types of stocks that investors will favor, leading since the start of the year to a marked sector rotation.
Tech and luxury crumble
Big winners in the markets since the start of the pandemic, the tech and luxury sectors have been the most handicapped by these prospects.
Herms fell 4.62% 1.504.50 euros, LVMH 4.08% 727.10 euros, Kering 3.06% 718.10 euros, these three stocks having a major weight in the CAC 40 index.
Capgemini fell 4.37% 203.30 euros, Dassault Systmes 3.65% 48.69 euros, and performance of 4.08% 378.10 euros.
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Banks smile
Rising rates in the bond market were doing the banks’ business. Socit Gnrale, which offered LeasePlan for 4.9 billion euros in long-term car rental, took 1.86% 32.85 euros. The operation would be carried out via its subsidiary ALD (+ 8.35% 14.28 euros).
BNP Paribas gained 1.36% 64.19 euros and Crdit Agricole 1.15% 13.24 euros. Financial Axa also took 0.70% 27.25 euros.
In addition, the slightest concerns about the danger of the Omicron variant continued to penalize health stocks (Eurofins Scientific -1.74% 98.69 euros) and favor industrial stocks (Renault + 0.38% 34.13 euros).
Rumors still carry Carrefour
The retail group Carrefour did even better than the day before, taking 6.29% 18.34 euros as new rumors of an attempted takeover by Auchan seemed credible to investors.