Cac 40: The purge continues for the Paris Stock Exchange, which falls below 6200 points

Cac 40: The purge continues for the Paris Stock Exchange, which falls below 6200 points

(BFM Bourse) – After losing 4.2% last week, the Paris Bourse continues its descent. 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.

Wherever savers look, they only seem to see ominous signs. Weakening of economic growth, soaring prices, various geopolitical conflicts and tensions and nagging pandemic as a bonus… We would almost forget that employment and consumption are still there (for the moment). Without a new catalyst, this week therefore begins on the tone of the previous one, with a decline of 1.51% to 6,163.94 points for the CAC 40 around 12:25 p.m.

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 (-3.5% for ArcelorMittal), payment services (Worldline -2.9%), luxury and cosmetics (-2.6% for L’Oréal) or electrical and digital building infrastructure (Schneider -2.5%).

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 6.5% 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 7%.

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%.

Also among the rare significant increases, Solutions 30 rose by 1.3% after the outperformance notice issued by Exane BNP Paribas (the changes in recommendation or objective for the day can be found here).

After climbing to their highest since early March on Friday, oil prices fell to 107.56 dollars for WTI (-2%) and 110.40 dollars for Brent (-1.77%).

On the foreign exchange side, the 1.05 dollar zone once again served as support for the euro, which returned to around 1.0534 dollars at midday.

Guillaume Bayre – ©2022 BFM Bourse