(BFM Bourse) – A day after a 1.6% bounce, modest compared to the previous CAC drop, the tricolor index fluctuates around mid-session on Thursday as investors continue to watch the conflict in Ukraine and the surge in commodity prices.
While the rebound in the Paris market had already slowed down late Wednesday afternoon (falling from +2.29% to just +1.59% about fifteen minutes before the close), Thursday’s trend was hesitant all morning. Around 12:30 CAC 40 stabilized at 6,499.64 points (+0.02%), while volumes were still well above normal (over 1.5 billion euros).
“Stock volatility, especially in Europe, has reached a high level, which logically reflects the tensions associated with an all-out Russian invasion of Ukraine, an event that seemed unlikely back in early February,” notes Nadezh Dufosse, “Multi-Active” manager of Candriam. But absolute volatility has not yet reached the peaks of previous major crises, “which would be a signal of capitulation in the financial markets.”
The situation is changing very quickly,” the specialist continues. Until this week, it seemed that the markets were counting on a fairly quick resolution of the conflict without a significant impact on our economies. “Now we are at a turning point. On the one hand, the US market is benefiting relatively from falling interest rates and more moderate expectations of a tightening of the Fed’s monetary policy in the short term. stocks that should perform better. On the other hand, we believe that the impact of the sanctions could lead to an energy shock that would affect growth in both Europe and the United States.” For several decades, armed conflicts did not have a lasting and significant impact on the markets, “except when they led to an energy crisis … which is at stake today,” says Nadezh Dufosse.
With a fresh peak near $120 earlier in the morning for Brent, up more than 50% year-to-date, oil prices are indeed reflecting a brewing crisis. In the middle of the session, the surge barely subsided (a barrel of oil from the North Sea traded at $114.51, up 1.58%, while WTI added 2.22% at $113.04). The whole question is how central banks will react to this factor of accelerating inflation, which has already reached its maximum in forty years. The head of the US Federal Reserve confirmed a rate hike this month to fight inflation, but he also admitted that an invasion of Ukraine poses a risk to growth prospects, putting the institution in an unenviable position.
One by one, the companies most exposed to Russian influence are revealing what they have to lose. For Engie, this is a €1 billion loan to the company managing the Nord Stream 2 gas pipeline project, the prospects for recovery of which are becoming doubtful, due to which the title loses 4%, a red light CAC 40. Renault, the leader of the Russian automotive market with almost 30 % of registrations through its subsidiary AvtoVAZ, still hovering at 3.4%. Publicis, the author of an impressive recovery between 2020 and 2021 (nearly 160% overvaluation), has suffered from the cyclical component of its activity for three weeks and is also losing 3.4%. Danone, which recently pointed out that Russia represents only 5% of all its revenues (through Prostokvashino, number one in the Russian dairy market and a real cultural symbol of the country!) lost 3.1%, while Societe Generale lost 1.9%.
Excluding the flagship index Interparfums, which (like every year) outperformed its annual targets, which had risen several times, nevertheless lost 7.3% due to a decidedly cautious management forecast (like every year). Faurecia’s shares fell 5.2% on worries about global auto production, leading investors to doubt the strategic targets the group announced a few days ago, shortly before Russia’s attack on Ukraine.
However, a few stocks stand out favorably, notably Technip Energies (+16%), while the group reported 2021 results that beat its targets and showed confidence in its outlook given its key role in implementing related technologies. independence and transformation of energy. On the same topic, GTT is still 3.8% ahead of Thales, very volatile, moving forward (+5.9%), with Vallourec benefiting from the announcement of two new contracts and holding 3.6%.
Guillaume Bair – © 2022 BFM Bourse