The flagship CAC 40 index experienced its biggest drop since January 19, falling 130.16 points to 7,187.27 points, its lowest level since February 10.
Over the week, it fell 2.18%, its worst weekly performance since mid-December.
Down during the morning, the Parisian rating fell after the publication of the PCE inflation indicator in the United States, favored by the American Federal Reserve, which took investors by surprise.
Headline inflation (+5.4%) and core inflation (+4.7%), which excludes the more volatile energy and food prices, both accelerated in January on a year, while a decline was expected. December figures were also revised upwards.
Faced with this news, the market’s reaction is “healthy”, according to Clémence de Rothiacob, manager at Richelieu Gestion.
“The rigidity of inflation is relaunching the debate on the rate of increase in key rates” of the Fed, she underlines. The key rate is its main tool for trying to control inflation by adjusting the cost of credit and, ultimately, economic activity.
Since the first rate hike in March 2022, the Fed had opted for jumps of 0.5 percentage points. She had cut the pace in half in February, and market participants thought it would stay that way in future meetings.
Return to sharp increases in key rates, “again worried about the risk of a recession”, so far avoided in Western economies, continues Ms. de Rothiacob.
Consequently, the cost of borrowing for the French State increased: the rate for the 10-year loan rose to 3.01%, its highest level for the year at the close.
A longer phase of decline in the index cannot be ruled out, as it has progressed since the start of the year (+11.02%).
The Parisian rating has suffered in particular from the decline of its heavyweights, such as luxury stocks: their high stock market valuation makes them more sensitive to rising interest rates.
Kering fell 4.29% to 553.80 euros, LVMH by 3.92% to 777.30 euros, Hermès by 2.61% to 1,677.50 euros. The cosmetics giant L’Oréal lost 2.98% to 372.95 euros.
Technology stocks also suffered from this environment, such as Capgemini (-2.79% to 176.95 euros) or Teleperformance (-2.75% to 250.10 euros).
The action of the French building materials giant Saint-Gobain escaped the gloom of the CAC by signing the best progression (+4.82% to 55.93 euro) after the publication of record financial results for the year 2022.