(BFM Bourse) – Wall Street closed on Monday for Memorial Day, the Paris Stock Exchange had a good start to the week, driven by reopening measures in China. The CAC 40 closed at its best level since the end of April, continuing the effort produced last week.
The atmosphere remains relaxed on the markets in the wake of the strong rebound observed last week, especially since the Chinese authorities have come to provide some relief from the severe constraints imposed in several megacities for long weeks in the face of a resurgence of Covid. -19. The Shanghai municipality wants to facilitate the return to work this week and has unveiled a plan to accelerate economic recovery in the region, while Beijing has reopened certain shopping centers and public transport lines.
The context was therefore ideal for prolonging the rebound initiated last week. The Paris Stock Exchange had rebounded by 3.67%, the best weekly performance since that of March 14. This Monday, it is an additional gain of 0.72% to be credited to the CAC 40 which closes at 6,562.39 points after a peak at 6,582.05 points during the morning. The increase of the day is however operated in small volumes of 3.1 billion euros, in the absence of the American operators during the “Memorial Day”. As every year, this last Monday of May is a public holiday in the United States on the occasion of a tribute to soldiers who died in combat. This gives rise to an extended three-day weekend which unofficially kicks off the “driving season” where American households gladly hit the road for vacation and traders are no exception.
“Beyond a likely technical effect after weeks of sharp correction, markets are benefiting from hopes of an improvement in the situation in China. Indeed, the number of new Covid cases in China is at its lowest in three months according to the authorities. In addition, the containment measures are starting to be relaxed more clearly in Shanghai and the risk of strict confinements in Beijing is decreasing. Finally, the authorities continue to announce more measures to support activity to revive growth” emphasizes Xavier Chapard. “It’s encouraging but China’s Covid risk will remain significant as the zero-Covid policy remains in place. Chinese PMIs for May released from tomorrow should show an improvement from the sharp contraction in the activity recorded in April, but they will in all likelihood remain in the contraction zone (below 50 points)”, warns the strategist of La Banque Postale Asset Management.
Consumption holds in the United States
The specialist also notes the reassuring dynamism of consumption across the Atlantic, despite the rise in prices and the end of budgetary aid. “This is reassuring for US growth in mid-2022, although consumption should begin to slow in the second half of the year and the risks of a sharper-than-expected slowdown remain significant.”
The winners of the flagship tricolor index left little room for interpretation, monopolized the whole session by Hermès (+4%), Kering (+3.3%) while LVMH limited its gains to 2.6 %, with third place going to Schneider Electric and its rise of 2.96%. L’Oréal for its part rose by 2.9%. Outside the flagship index, Interparfums (+5.1%) benefited from the same trend linked to the prospect of renewed consumption in China.
The automobile (+2.08% on Renault, +1.91% on Stellantis) was also sought after as well as a certain number of industrial stocks, while the so-called defensive stocks were rather struggling.
Sanofi in particular, the laboratory announcing a delay in clinical trials aimed at obtaining authorization to put its drug Cialis, a competitor of Viagra, on free sale (without prescription). The title of the tricolor pharmaceutical group lost nearly 2%, the largest drop in the featured sample. Orange lost 0.94% and Air Liquide contained its decline to 0.35%.
After gaining more than 2% at Friday’s close, Bonduelle gained another 3.5% after its North American operation.
Note Carmat’s surge of more than 11% at the close, supported by expressions of interest from Degroof Petercam analysts on the file. The experts of the Belgian bank adopt a buyer bias with a price target housed at 25.40 euros, which Degroof Petercam justifies by the commercial potential of the Aeson artificial heart devoid of serious competition.
On the other hand, GTT plunged by more than 10% under the impact of sustained profit taking after its remarkable stock market performance. Despite the decline of the day, the title still shows a 44% increase since January 1.
On the foreign exchange market, the euro benefited from the renewed appetite for risky assets and recovered 0.47% to 1.0779 dollars. On the oil side, prices rose to 120.80 dollars per barrel of Brent (+ 1.38%). WTI was also up more than 1% at $116. European leaders are trying to agree on a proposed Russian oil embargo while Hungary, heavily dependent on black gold from Moscow, remains opposed to these retaliatory measures in the current version.
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