The Paris Stock Exchange lost 0.83% on Tuesday, weighed down by pessimistic forecasts for the global economy and the decline in luxury sector values, in a context of a sharp rise in bond interest rates.
The CAC 40 index sank from 54.56 points to 6,534.79 points, after a four-day weekend. On Thursday, the Parisian rating had ended up 0.72% after the meeting of the European Central Bank which had given no precise timetable for a possible increase in its key rates.
The Parisian coast started the day in the red, losing around 1% until the opening of Wall Street, after pessimistic prospects for global growth reported by two institutions.
Due to the explosion of inflation, the war in Ukraine and the severe restrictions which continue in China in the face of Covid-19, the World Bank has indeed lowered its outlook for global growth for 2022 to 3.2%, against 4.1% anticipated in January.
The International Monetary Fund also sharply lowered its global growth forecast for 2022 on Tuesday due to seismic waves caused by the war in Ukraine and warned that inflation was set to last, especially in emerging countries.
Regarding the euro zone, the Washington institution now anticipates growth of 2.8%, down 1.1 points from its previous forecasts in January. The French economy should grow by 2.9% (-0.6 points compared to January) and the forecast for Germany drops by 1.7 points to 2.1%.
The bullish trend on Wall Street, however, helped limit the decline in the Paris Stock Exchange, with corporate results appearing to be cause for hope for the equity markets, as we can still expect higher profits in the first quarter, according to Valentin Bulle, asset manager at Dm Finance.
L’Oral reported, after market close, sales up 19% in the first quarter. Danone, Carrefour, Eurofins or even Kering are expected in the coming days. In the United States it is the technological sector which is the honor this week.
The movements were more notable on the bond market, where sovereign yields rose sharply, according to Valentin Bulle, due to expectations of monetary policy tightening by central banks. The interest rate on French 10-year debt rose to 1.377%, against 1.33% at the close of the previous day.
James Bullard, one of the most determined US Federal Reserve officials to restrict monetary support to the economy, on Monday envisaged raising rates by 0.75 points.
The days when James Bullard speaks are days when the markets go down, notes Mr. Bulle, because he tips the scales towards an even more severe tightening.
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Luxury stocks lost ground in the face of inflationary pressures, retail sales at a two-year low in China and rising bond yields.
L’Oral, which has just presented its results, lost 2.90% to 350.95 euros, Herms 3.62% to 1,237 euros, LVMH 0.92% to 634.10 euros and Kering 0.73% to 529.90 euros.
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