The Paris Stock Exchange closed down 0.44% on Wednesday, led by the luxury giant LVMH which dropped more than 6% after announcing sales that were worse than expected by analysts.
The flagship CAC 40 index dropped 31.22 points to 7,131.21 points. On Tuesday, the Parisian stock market jumped 2.01%, its best performance since July, thanks to the decline in American bond rates.
The Parisian session was marked by the negative reaction of investors to the third quarter results of the world’s number one luxury goods company, LVMH. The share fell 6.46% to 686.10 euros.
Bernard Arnault’s group announced that it had achieved a turnover of 19.96 billion euros in the third quarter, an increase of 1% over one year, a figure which is lower than forecasts.
The market capitalization of the luxury group, that is to say the sum that would have to be paid to buy all its shares, is now around 344 billion euros, a fall of 24 billion euros in one session. More than a quarter of CAC 40 companies are not valued as highly by investors.
Above all, these results reflect the macroeconomic situation, comments Alexandre Baradez, head of market analysis at IG France.
We see that the tightening of monetary policies carried out by the European and American central banks affects all sectors, with money being less available and more expensive, continues the analyst.
The problems with China’s resumption of activity since the end of confinement are also evident in these results, with the group’s growth slowing down in this geographical area, adds Alexandre Baradez, while China has barely started again since the end of confinement.
The other luxury stocks listed in Paris also closed in decline: Kering fell by 1.42% to 427.95 euros and Herms by 1.50% to 1,751 euros.
The latest point of tension for the Parisian market is that the market is wondering whether the relaxation of bond rates will be sufficient to push equity market prices up, concludes Mr. Baradez,
Indeed, recent weeks have been marked by a surge in bond rates, with the yield on 10-year American bonds having reached up to 4.88%, the highest in more than 16 years, at the start of the month, with investors fearing that the restrictive policy of central bankers continues. These movements then led to a decline in the equity markets.
On Wednesday around 6:15 p.m., the American 10-year rate was 4.58% compared to 4.65% on Tuesday. The ten-year German debt rate, which is a benchmark on the Old Continent, was 2.72% against 2.77% and the French stood at 3.32% against 3.39%.
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In the evening, the report of the discussions of the last meeting of the American Central Bank will be published, which can enlighten investors.
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