The Paris Stock Exchange dropped 0.83% on Monday, driven by the decline in the luxury sector driven down by China, the rise in bond rates also slowing down investors on the stock market.
The flagship CAC 40 index dropped 60.94 points to 7,123.88 points. It had lost 0.40% on Friday and 2.63% over the week.
“The guiding line since Thursday, and which will accompany us for a long time, is the subject of central banks, in particular the Federal Reserve (Fed), which fuels the continued rise in rates” on the bond market, comments Guillaume Chaloin, director of equity management of Delubac AM.
Last week, the American monetary institution announced that it would maintain its rates in the range of 5.25-5.50% while forecasting an additional increase by the end of the year, and rates slightly higher than 5.0% in 2024, a higher level than expected.
However, “if rates rise, this means that money is more and more expensive, and therefore that financing economic activities” is more expensive, explains Guillaume Chaloin.
In this configuration, the stock market is losing ground in favor of the bond market, where the yield on 10-year US government bonds has risen to 4.53%, its highest level in almost 16 years. .
In Europe, the interest rate on the ten-year German government bond stood at 2.79%, after reaching its highest since July 2011 at 2.81% a little earlier. The French equivalent has also reached a peak since January 2012 (3.36%).
Luxury toasts
Kering shares fell 4.54% to 439.55 euros, the biggest drop in the CAC 40, after a note from Bank of America downgrading its recommendation on the stock.
Its Gucci brand unveiled the first collection of its new artistic director Sabato de Sarno on Friday, which constitutes a “good starting point for a new design chapter”, according to RBC analysts.
Furthermore, “a good part of Kering’s results come from Gucci and the brand is very present in Asia,” explains Mr. Chaloin.
However, the Chinese real estate developer Evergrande announced a blockage in its restructuring plan intended to guarantee its survival, which has revived investors’ concerns about the economic recovery of the second largest economic power in the world.
Sensitive to the Chinese market, other luxury stocks fell in Paris: LVMH lost 2.59% to 713.30 euros, Hermès 3.36% to 1,732.80 euros. The cosmetics giant L’Oréal dropped 1.72% to 391.50 euros and EssilorLuxottica 1.30% to 165.78 euros.
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