(BFM Bourse) – The Paris Stock Exchange continues to sink new lows. This Monday evening, the CAC 40 dropped 2.75%, its biggest drop since March 10, and closed below 6100 points. Since the beginning of the year, the three-color flagship index has dropped 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 closed on Monday at -2.75% at 6,086.02 points in a volume of 3.7 billion euros traded. The star index in Paris had not experienced such a fall since March 10 (-2.83%).
The movement took all of the European markets, 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 were not spared from the decline. On Wall Street, the Nasdaq accelerated its fall and fell 3.50% at the European close, while the Dow Jones lost 1.58% and the S&P 500 2.43%. On the cryptocurrency side, Bitcoin fell to its lowest level since July 2021, around 32,000 dollars on Monday around 6 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 falls going to companies from industries as different as payment services (Worldline – 4.87%) or technological stocks (Dassault Systèmes -4.78%), luxury goods and cosmetics (-3.67% for L’Oréal) or electrical and digital building infrastructures (Schneider -4%). Oil stocks also fell, with TotalEnergies losing 4.87% in the wake of the more than 5% drop in oil prices on fears 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 took advantage of this, gaining 2.1% 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, was also sought 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 stock rose 4.55%. Eurofins Scientific for its part gained 0.3%.
A rare survivor among industrial stocks, Alstom gained 1.9%. 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 drop in demand for black gold in the wake of sanitary measures in China to combat 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 returned to around 1.0570 dollar.
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