(BFM Bourse) – The CAC 40 failed to curb its decline, but still fell nearly 3% on Monday after falling 10% last week due to the effects of the conflict caused by Russia in Ukraine. Since the peak in early January, the decline has now reached the 20% typical of a bear market.
Baffled by the economic fallout from the war in Ukraine and sanctions against Russia, the Paris market entered a “bear market” phase Monday morning, falling more than 20% since its last peak, recorded in early January, to nearly 7,400 points. Down 2.77% from opening, the flagship CAC 40 index quickly increased its losses by falling below 5,800 points in the early morning, before returning to 5,885.20 points (-2 .91%). Trading volumes are again very high, already exceeding 2.7 billion euros.
On the twelfth day of the conflict, major European indices fell (-3.4% in Frankfurt, -2.4% in Milan and “only” -1.8% in London) in response to the surge in oil prices, while US Secretary of State Antony Blinken has raised the possibility of banning Russian oil imports. The Brent barrel futures contract was up 7.58% to $127.06, while WTI gained 7.37% to $124.20.
“Russia’s invasion of Ukraine has increased the distribution probability of stock market performance. The increased uncertainty stems from a range of factors, including but not limited to: President Putin’s intentions, the extent of future sanctions, the fate of weapons, defense policy of non-NATO states, China’s perceived position, commodity prices, global growth, inflation and central bank policies.” , notes the UBS strategy team.
“As a result, we are now less confident in the possibility of any given scenario becoming a reality and the range of potential developments is also broader – both up and down. less clear risk/reward tradeoff means we are adjusting our tactical positioning on equities from favored asset class to neutral,” the bank explains.
Schematically, there are only two sectors that appeal to investors in the eyes of investors: on the one hand, defense (with a further +6.5% this morning for Thales, which has risen almost 50% since the beginning of the year) and on the other hand producers of raw materials , especially in energy and metals. Inhibited by the threat of in turn having to draw a line among its assets in Russia, TotalEnergies is currently still at 0.85%. Oil services benefit much more fairly at 8.6% for Vallourec or 6.8% for CGG.
Conversely, the way of the cross continues for Engie (-6.6%), Renault (-5.5%) or Société Générale (-5.9%). Crédit Agricole is selling 5%, while the bank has estimated its exposure to Russia and Ukraine at 0.6% of its commercial liabilities. Danone will “provisionally” maintain its production and distribution of fresh dairy products and infant nutrition in Russia to meet the basic food needs of the civilian population, but suspend all new investment in the country. The title is down another 3.1%.
The flight to the dollar continues in the foreign exchange market, with the euro losing another 0.92% to $1.0834, its lowest level since summer 2020. In the crypto asset universe, bitcoin is down 1.7% to USD 38,318.
Guillaume Bayre – ©2022 BFM Bourse