The Paris Stock Exchange fell more than 3% on Thursday, its worst session since March, bearing the full brunt of the sudden rise in bond market rates after signals of severity from the American central bank. The star CAC 40 index lost 228.52 points to 7,082.29 points, its worst session since March 15. After four sessions in the red this week, its losses are 4.29%, the worst weekly performance of the year. The index even fell to its lowest level since March 27.
Elsewhere in Europe, losses were also notable in London (-2.17%) and Frankfurt (-2.57%). The Parisian rating opened in the red, but especially saw its fall accentuate in the second part of the session, after the publication of job creations in the United States twice as many as expected, and at their highest since a year according to the ADP/Standford Lab survey. The data comes ahead of the release of the official jobs report on Friday. Thursday’s data “implies that the job market continues to tighten,” said IG analyst Alexandre Baradez.
However, the job market is one of the US Federal Reserve’s barometers for calibrating its response to inflation, which is declining but still well above the 2% target. Consequently, “the bond rate market considers [likely] the risk of having a rise in July and another in September” from the Fed to further combat inflation, after ten rate hikes since 2022 and a break at the last meeting.
The French 10-year interest rate soared to come close to 3.20%, more at the level since March, when it was only 3.02% on Wednesday. It is its highest level since its ten-year high in early March. The French 2-year rate also rose sharply to end at around 3.45%, against 3.38% on Wednesday. This analysis was backed up by a statement by Lorie Logan, a member of the central bank’s monetary committee (FOMC), who believes that “a more restrictive policy” is needed.
On Wednesday, the minutes of the discussions of the June meeting of the Fed had been “hard in its tone”, according to Alexandre Baradez, showing “intense discussions”, on the advisability of the break. All CAC 40 stocks ended down. The largest drop is for the giant shopping centers Unibail-Rodamco-Westfield (-5.55% to 47.34 euros), the real estate sector being sensitive to interest rates.
The technology sector also suffered with Capgemini at -4.54% to 167.10 euros, STmicroelectronics (-5.12% to 43.05 euros), Teleperformance (-4.23% to 146.15 euros). Luxury stocks, heavyweights in the index and whose very high valuations are also sensitive to rate changes, have not escaped the trend: Hermès fell 4.79% to 1,840 euros, LVMH by 3, 72% to 816 euros. Only values with a defensive profile, a little more sought after in the event of a heat wave on the markets, held up better, such as Carrefour (-0.44% to 16.80 euros), or Orange (-1.06% to 10 .48 euros).
