The Paris Stock Exchange managed to rebound Thursday after its disastrous session the day before, investors having appreciated the confidence displayed by the European Central Bank and turning in particular to luxury.
The star CAC 40 index regained 140.01 points to 7,025.72 points. The day before, it had experienced its worst session in a year, with a drop of 3.58%.
The results for the week are still largely negative, with a 2.70% decline in the CAC 40.
Attention was still on the banks after Credit Suisse’s setbacks on Wednesday. The sector has limited damage to Paris, while remaining behind other values.
Credit Suisse rallied on Thursday helped by the Swiss central bank which insisted that there was no risk of contagion between the difficulties of some banks in the United States and the Swiss financial market and by the assumption of its takeover.
Main actor of the day, the European Central Bank did not let itself be frightened by the risk of a new banking crisis and decided in favor of a new increase in rates by half a percentage point in order to combat the inflation, judging that the banks of the euro zone were solid and resilient.
The guardians of the euro are however cautious about the continuation of the monetary tightening and have given up on their commitment to raise rates significantly further in the coming months, anticipating lower inflation for 2023 and 2024 compared to their December forecast.
The lack of commitment on the path of rates is a sensible decision, given the immense uncertainty and the situation in the banking sector, according to Craig Erlam, analyst at Oanda.
Time will tell if today’s hike has made matters worse or if it represents needed continuity and comfort, he adds, however.
On the bond market, rates only rose slightly after falling sharply for a week. The interest rate for the French 10-year loan ended at 2.82%, while it was well above 3% at the start of the month.
Luxury carries the CAC
Luxury, a sector with a strong valuation and which investors prefer when rates are low, jumped at the end of the session.
Herms took 4.69% to 1,765.00 euros, even progressing over the week, while LVMH gained 3.49% to 801.70 euros and Kering 2.52% to 552.90 euros. In cosmetics, L’Oral gained 3.38% to 383.70 euros.
This effect also benefited technology stocks: Dassault Systmes jumped 4.20% to 38.09 euros and Capgemini 2.47% to 169.89 euros.
A little better for banks
The banking sector recovered a little after the heavy losses of the day before, but ended up in scattered order. BNP Paribas took over 1.31% to 52.71 euros, Credit Agricole 0.02% to 10.22 euros, but Socit Generale lost 1.21% to 21.24 euros.