Cac 40: The Paris Bourse again panicked over the emergence of a new variant

(BFM Bourse) – While the number of patients is already increasing rapidly under the effect of the Delta variant, the detection in South Africa of a new variant of the coronavirus with still poorly understood characteristics, but potentially more contagious, leads to a very negative reaction from financial markets.

The discovery in South Africa of a new variant of Covid-19, for the moment designated B.1.1.529 (if it is classified as “variant to follow” or a fortiori “worrying variant” by the WHO a Greek letter will then be attributed to him) plunged the financial markets again on Friday, according to a scenario strongly reminiscent of certain episodes of last winter. In particular the sessions of October 28, where the CAC 40 had lost up to 4.4%, and of December 21, 2020 (up to -4% that day because of the so-called “English” variant, the first to receive a Greek letter then: Alpha).

If the WHO has since had to follow several variants with particular attention, including the Delta (initially detected in India) or more recently Mu, initially detected in Colombia, this did not ultimately prevent the markets from recording very good results. performance since the start of the year thanks to the recovery in the economy and corporate profits.

But the risk of yet another potentially worrisome variant escaping once again throws the markets into a state of panic. The problem is that scientists still know very little about this recently detected B.1.1.529. “It will take us several weeks to fully understand the impact of this variant” explained Dr Marian Van Kerkhove, epidemiologist in charge of COVID-19 at the World Health Organization. “What we do know is that this variant has a high number of mutations and our concern is that this changes the way the virus behaves,” she added, suggesting a risk of escape from existing vaccines.

In reaction, the CAC 40 lost up to -4.8% in the first minutes of trading, a drop unprecedented since the crash of spring 2020. At mid-session, however, the decline was “limited” to 3.15 %, at 6,852.97 points at 12:20 p.m.

“The only thing that can really derail the global recovery has always been a new variant of Covid-19 sweeping the world and leading to the reimposition of massive health restrictions,” recalls Jeffrey Halley, analyst for Oanda. “There are fears that if existing vaccines do not work, people will have to re-confine themselves,” said Nobuhiko Kuramochi of Mizuho Securities, quoted by Bloomberg agency.

In the eyes of Patrice Gautry, Chief Economist at Union Bancaire Privée, guest of BFM Patrimoine on Friday morning on BFM Business, the markets are undergoing epidermal reactions, but potentially exaggerated. On the one hand, it is not yet established that this new variant is resistant to vaccines, which manufacturers will also be able to develop like those against seasonal flu. Europe is also seeking to protect itself, which is rather good news, observes the specialist.

Moreover, while worries have been more lately about much stronger monetary tightening, central banks are sure to postpone their monetary adjustments if necessary and governments will continue to support activity.

As in the episodes mentioned above, investors massively turn away from stocks whose income depends on the degree of openness of economies, and take refuge in the few companies whose activity is mechanically increased such as the producers of tests, but also those who would benefit from a tendency for consumers to take refuge at home, such as video games.

Among the main victims of the day is the catering specialist Elior (-10.5%) while employers are urged to promote teleworking, when Sodexo loses 6.8%. The increase in the suspension of routes to southern Africa is weighing on the aviation sector (-9.3% for Airbus, -9.1% for Safran, -8.6% for Air France-KLM).

Automotive (-4.8% for Faurecia or Renault, -4.1% for Stellantis) was not spared either, nor was finance (-5.6% for Société Générale, -4.6% for BNP).

Oil and gas companies are also penalized (-5.1% for TotalEnergies) by the sharp drop in crude prices, including -5.75% to 76.28 dollars in the case of oil from the North Sea, Brent .

Only a minority of stocks manage to keep their heads above water, including the French giant of Eurofins analyzes, which takes off by nearly 6%, or outside the flagship Sartorius Stedim Biotech index (+ 6.5%), bioMérieux (+ 5.4%) and Novacyt (+ 21%). Vaccine maker Valneva, which could soon see its inactivated whole virus vaccine licensed due to positive Phase 3 results, climbs 8.4% while detergents and disinfectants producer Orapi gains by 7.7%.

Guillaume Bayre – © 2021 BFM Bourse

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