Cac 40: Still struck by rate hikes, the Paris Stock Exchange continues to fall

(BFM Bourse) – The CAC 40 fell sharply in mid-session and is not recovering from the tightening of the Federal Reserve’s monetary policy. Airbus resists this bad trend, however, thanks to announcements on the shareholder return policy.

It was a tough week for the Paris Stock Exchange, which had to weather renewed tensions in the Ukrainian conflict and especially the announcements by the American Federal Reserve (Fed). Still sounded by the announcements of the American central bank, the CAC 40 lost 2.13% around 12:55 p.m. to 5,792.47 points, after having already lost around 1.9% the day before. Over the week as a whole, the Parisian index is heading for a drop of more than 3.5%.

“The majority of the major central banks continue their fantastic ride to fight against inflationary pressures. The race to tighten monetary policy can be described as historic in its scale and speed”, underlines Sebastian Paris Horvitz, of La Banque Postale Asset Management.

The Fed wants to move fast

For this financial intermediary, “there is no ambiguity about the direction of monetary policy for the months to come. Not only will the increases continue, but they will take place at a rapid pace”. “In fact, the Fed wants to move quickly towards a monetary policy that will be clearly restrictive, or towards positive real rates,” he adds.

“With Wednesday’s sharp rate hike set to continue throughout the year in the U.S. (and globally) then the question arises as to what the real economy’s impact will be.” his side John Plassard, investment specialist at Mirabaud.

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In terms of indicators, the euro zone PMI indices, which measure private sector activity in the monetary union, were hardly encouraging. The composite index, which includes manufacturing activity and services, stood at 48.2 in September, a 20-month low. As a reminder, a PMI below 50 indicates a contraction in activity, above 50 its expansion. “The September PMI surveys are consistent with a slight decline in eurozone GDP in the third quarter,” Capital Economics said.

The euro plunges

. On the other other markets, the euro fell 0.7% against the dollar, to 0.9766 dollars, a 20-year low, the greenback benefiting from its status as a safe haven. Oil prices are also falling. The Brent contract for delivery in November lost 2% to 87.79 dollars while that of the same maturity on the WTI listed on the Nymex fell 2.2% to 81.67 dollars.

On the value side, red is obviously de rigueur and automotive suppliers are particularly suffering. Faurecia lost 6.2%, Valeo dropped 4.8% while Akwel, which published half-year results down sharply, dropped 2.1%.

Business transformation consultancy group Micropole plunged 15% as its half-year results were chipped away by the costs needed to attract talent.

Airbus resists, and takes 0.3%, signing the only increase in the CAC40 after its management has undertaken to improve the return to the shareholder, citing possible share buybacks.

M6 for its part takes 8.2%, still benefiting from renewed speculative interest as its owner RTL Group has decided to put its 48% stake in the French audiovisual group up for sale.

Bic for its part took 2.2% supported by UBS which initiated its purchase coverage on the stock.

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Julien Marion – ©2022 BFM Bourse

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