The control room of Euronext, the company that manages the Paris Stock Exchange (AFP / ERIC PIERMONT)
The Paris Stock Exchange closed down 2.01% on Monday, expressing concern about the aggressive attitude of the Fed and the health situation in China which threaten growth, but indifferent to the upheavals of French politics in the aftermath of the re-election of Emmanuel Macron.
The star CAC 40 index sank 132.04 points to 6,449.38 points. Already on Friday, the stock market had lost nearly 2%, particularly worried about the statements of the head of the Federal Reserve (Fed) Jerome Powell.
He had indicated Thursday that an increase in the key rates of the Fed by half a percentage point “was on the table” for the next monetary meeting in early May, in order to fight more strongly against inflation.
“Rising rates in a context of slowing growth can start to worry the markets,” Yohan Salleron, equity manager at Mandarine Gestion, told AFP, for whom “the cyclical part of the rating”, whose variations are most related to economic activity, “is suffering a little”.
According to the manager, “the Covid, especially in China”, is also responsible for the gloom, because it “is starting to weigh a little bit on growth prospects”.
Almost all of the 25 million inhabitants of the economic capital Shanghai have been confined since the beginning of April, disrupting supply chains and all economic activity in the country. And the threat of containment, after a rare epidemic outbreak, now threatens Beijing.
The re-election of Emmanuel Macron on Sunday as President of the Republic, however, left the Stock Exchange unmoved.
“The latest polls had made it possible to anticipate this re-election”, explains Mr. Salleron, so that certain French stocks “very linked to Macron’s re-election” such as banking, “benefited from it at the end of last week”.
Therefore, “there is no particular re-election bonus” on Monday, he analyzed.
Luxury and mining weighed down by China
The luxury sector, very dependent on the Chinese market, suffered the blow on Monday. Kering lost 4.35% to 506.20 euros, Hermès 3.91% to 1,179.00 euros and LVMH 3.75% to 615.60 euros.
A “warning signal” on “the potential impacts of the closure in China” had already intervened on Friday according to Yohan Salleron, with the fall of more than 5% in the title of Kering, weighed down by its Gucci brand.
Shares of mining companies also toasted, investors expecting disruptions to production lines and a drop in demand for raw materials caused by an economic slowdown in China. ArcelorMittal fell 8.84% to 26.92 euros, TotalEnergies by 4.01% to 44.03 euros and Aperam by 5.85% to 35.43 euros.
Euronext CAC40