(BFM Stock) – After 4 sessions in the red, the Paris market offered an exceptional rebound of 7.13% this Wednesday, against the background of the first positive signs of a possible peace between Ukraine and Russia, of an easing of commodity prices and – massive purchases on favorable terms.
If an investor who hasn’t followed the news of the day just looks at the variation of the CAC 40 at the end, he might think that the war is over because the performance is so spectacular: +7.13% i.e. the 10th The index’s best daily performance since its inception in 1987 and its biggest increase since November 9, 2020, when hopes born of the Pfizer vaccine had led to a 7.57% rise. However, this is not the case, fighting is still raging in Ukraine at a time when the Paris market is closing its doors after a sensational recovery, fueled by the combination of huge investor returns on discounted stocks and a brief lull in energy prices. , after new historical records (gas) or nearly 15 years old (oil). Taking down 425 points on the day’s session, the tricolor market barometer offers itself a record on this side.
“It’s most likely a dead cat bounce” (or “dead cat bounce” according to the still very beastly market jargon, indicating a brief recovery in a bearish context over time, Ed), judge Craig Erlam, analyst at Oanda, who therefore believes that today’s hearing is just a “temporary corrective move”. “The invasion is still ongoing, sanctions are still in place, oil prices are still high […] None of this is conducive to a sustainable stock market recovery.”
A first step towards peace?
Still, the markets were not immune to the first signs of calm seen between Kiev and Moscow on Wednesday. On the Ukrainian side, President Zelensky says he no longer wants to push for his country to get NATO membership, one of the issues that officially motivated Russia’s invasion of his country, saying he is ready for a “compromise” on the status of separatist areas. A change of position that could fuel discussions scheduled for Thursday in Antalya, Turkey, between Russian foreign ministers Sergei Lavrov and Ukraine’s Dmytro Kuleba, with their Turkish counterpart Mevlüt Cavusoglu as mediator.
Especially since during a press conference on Wednesday, Russian diplomacy spokesman Maria Zakharova, in turn, appeared to be reducing the conditions the Kremlin had set in its peace negotiations until then. “Negotiations are underway with the Ukrainian side to end as soon as possible the senseless bloodshed and resistance of the Ukrainian armed forces. […] Some progress has been made,” she said, adding that Russia’s goals “do not include the occupation of Ukraine, the destruction of its state or the overthrow of the current government”. Kremlin, with Vladimir Putin notably qualifying the Ukrainian president as a “Nazi” and a “drug addict” on several occasions, while imagining his expulsion as another preparation for possible negotiations.
Strong recovery of sanctioned stocks since the start of the war
These initial positive signals allow investors to see a positive outcome from this armed conflict and massively return them to the stocks that have suffered the most since the conflict began. Namely, in the first place, the flagships directly exposed to Russia, such as Société Générale (+11.5%), Alstom (+9.3%) or Renault (+11.1%).
In fact, the ranking has completely reversed from the trend of recent weeks, with rare stocks largely benefiting from the geopolitical situation (particularly the arms and energy sectors) which were the only ones in the red on Wednesday. We are thinking in particular of Thales (-4.2%) and Dassault Aviation (-5.5%), but also of some oil services stocks, such as the refining specialist Esso (-14.2%), that of prospecting Schlumberger (- 5.7%) or the equipment manufacturer Vallourec (-3.9%).
In the other direction, other notable rebounds should be highlighted, starting with those of Faurecia (+17.2%) and Valeo (+13.5%), which – like the entire automotive sector – suffered heavily for several weeks – Stellantis ( + 11.9%) and Michelin (+ 9.8%) also benefit. Investors are also massively returning to buy the banking compartment (+10% for BNP Paribas, +9.1% for Crédit Agricole), as well as other neglected stocks (+12.3% for Veolia, +10.5% for URW) . LVMH (+9.6%) and Airbus (+9.5%) – just to name a few – also offer convincing rebounds.
Oil ebbs the day after the embargo
On the oil side, the prices of key references fell on Wednesday after their frenzied rise in recent days, culminating in the embargo imposed on Russian oil and gas by the United States and the United Kingdom on Tuesday. In the wake of the White House announcement, Ukrainian President Volodymyr Zelensky said he was “grateful to the United States and the leadership” of Joe Biden for this “slap to the heart of Putin’s war machine” — and prices soared. over $130, levels not seen since 2008. While gas prices on their side are reaching heights never seen before, Economy Minister Bruno Le Maire estimated on Wednesday that the current energy crisis is “comparable in intensity and brutality to the 1973 oil shock”. However, around 6:10 p.m., the prices of the global crude benchmarks, Brent and WTI, fell significantly compared to the previous day, with the former trading at $119.6 (-6.5% compared to the previous day) while the second trading at $119.6. $116.6 (-5.7%).
In the Forex, or foreign exchange market, the single currency sharply accentuated its rebound that began the day before, recovering 1.49% against the dollar, at $1.1065.
Quentin Soubranne – ©2022 BFM Bourse