(BFM Bourse) – The Paris Stock Exchange continues to sink new lows. This Monday evening, the CAC 40 dropped 2.75% and closed below 6100 points. This is the biggest drop in the Parisian index since March 10. Since the start of the year, the CAC 40 has lost more than 15%.
Investors see growth prospects rapidly deteriorating, at a time when the imperative to fight inflation will no longer allow central banks to generously support the economy. And a wave of panic is spreading on the stock market. The CAC 40 thus closes on Monday at -2.75% at 6,086.02 points in a sparse volume of 3.7 billion euros traded. The star index in Paris had not experienced such a fall since March 10 (-2.83%).
The other European markets are carried away by this movement of panic, Frankfurt lost 2.15%, London 2.32%, Milan 2.74% and the European benchmark index, the Eurostoxx 50 2.82%. At the same time, US markets are not spared from the decline. On Wall Street, the Nasdaq accelerated its fall and fell by 3.50% at the same time, as did the Dow Jones (-1.58%) and the S&P 500 (-2.43%). The cryptocurrency market is not left out either, especially Bitcoin which reached its lowest level since July 2021, around 32,000 dollars this Monday around 3 p.m.
A movement of panic fueled by the evolution of monetary policies
The future evolution of monetary policies remains the greatest concern for investors, stresses the team of strategists at La Banque Postale Asset Management, as well as the possible danger of a more pronounced deceleration in activity than expected, or even the possibility of a recession. This perspective also gained ground at the end of the week with the Bank of England’s forecast of a fall in GDP of 0.25% in 2023, while inflation would remain very high. “The prospect of a recession as inflation recedes very slowly has contributed to dragging nearly every asset class down over the past week. Interest rates have risen sharply, lowering bond values, as that the stock markets were falling sharply. It is likely that this volatility will remain very present”.
In this context, LBPAM believes that “prudence must prevail in asset allocation”. “We believe it is important to maintain a very defensive exposure, still favoring reasonable valuations on equities in the face of the growth concerns and rising interest rates that we have just experienced. At the same time, It is important to note that the latest US employment data for the month of April continue to confirm the robustness of the job market across the Atlantic, which should support growth for a while, even if this should consolidate the rapid tightening of the monetary policy initiated by the Fed”.
85% of values in the red
Without strong news on the business side, nearly 85% of the main Parisian stocks are down, again without a marked sectoral trend, the main drops going to companies in industries as different as steel (-1.41% for ArcelorMittal), payment services (Worldline -4.87%) or technology stocks (Dassault Systèmes -4.78%), luxury goods and cosmetics (-3.67% for L’Oréal) or electrical infrastructure and building digital (Schneider -4.02%). Oil stocks are also neglected, TotalEnergies yielding 4.87% in the wake of the decline of more than 5% in the price of black gold under fear of a slowdown in Chinese demand.
In this unattractive context, the healthcare sector seems to be regaining the appeal of its defensive character. Coming from Sanofi, the specialist in the production of active pharmaceutical ingredients Euroapi benefits from this, gaining 2.13% for its second session while JPMorgan warmly recommends the title, which it considers very discounted compared to its comparables. A potential customer (if its development projects lead to drugs), Adocia, is also wanted on Monday: the Lyon-based biotech announced the start of a phase 3 trial (last stage of clinical trials before possible marketing) for its ultra-rapid absorption insulin in partnership with Tonghua Dongbao, China’s leading insulin producer. The action climbed 4.55%. Eurofins Scientific picks up 0.31%.
The Alstom action, a rare survivor of the day, gained 1.93% to 22.73%. The Baden-Württemberg transport authority has ordered 130 Coradia Stream regional train sets from the French group for 2.5 billion euros, excluding a potential increase since an option has been put in place for up to 100 additional trains.
Operators are also betting on the Ateme file, which signs a fifth session of increase in a row, in the wake in particular of the raising of its growth objective for the current financial year to a range of between 15 and 20%. The stock closed up 4.63% at 14.02 euros.
Also among the few significant increases, Europlasma gained more than 10% after positive results in aluminum recycling.
After climbing to their highest since early March on Friday, oil prices fell to 104 dollars for WTI (-5.93%) and 106.84 dollars for Brent (-5.64%), weighed down by fears of a fall in demand for black gold in the wake of sanitary measures in China to fight against a resurgence of Covid-19.
On the foreign exchange side, the 1.05 dollar zone once again served as a support for the euro which is returning to around 1.0570 dollar, the dollar is still high against the single currency with the Fed’s turn of the monetary screw. initiated last week.
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