(BFM Bourse) – The Parisian index ended in decline this Wednesday following the Republican's victory for accession to the White House. Initially enthusiastic about Trump's pro-growth program, the CAC 40 was overtaken by fears of trade tensions.
The return of Donald Trump to the White House caused impressive volatility on the CAC 40 this Wednesday. While the Paris index gained 2.2% at the height of the session, it then turned around in the afternoon, as American investors woke up.
The Parisian index finally ended down, losing 0.51% to 7,369.61 points. Our national market is far from being an isolated case. In Frankfurt, the DAX 40 lost 1.1% and in Milan, the FTSE MIB lost 1.54%.
This reaction is, on the other hand, limited to Europe and does not reach Wall Street where investors continue to applaud the return of Donald Trump. Shortly before the European close, the Dow Jones Industrial climbed 3.2%, the S&P 500 2% and the Nasdaq Composite 2.22%.
Initially, European markets were supported by the fall of the euro against the dollar, beneficial to exporting industries, as well as by the pro-business measures desired by Donald Trump. In particular, the reduction in corporate tax to 15% (compared to 21% currently). This tax relief is likely to support European groups with a strong presence in the United States.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
The risk that no market rises except the United States
Secondly, investors seemed to be more concerned about the commercial risks and international uncertainty that are likely to emerge with the election of the businessman.
“Fears of an aggressive trade policy and geopolitical tensions, particularly due to NATO policy changes, are weighing on the indices,” noted Saxo Bank.
European investors now realize that if the Republican's program “is implemented, it could be devastating for Europe, with risks to growth and inflation”, underlines Lionel Melka, manager at Swann Capital interviewed by the AFP.
“In our view, the US election result is historic in nature: it has the capacity to create a regime shift in markets whereby correlations collapse due to highly idiosyncratic and divergent shocks between the US and the rest This is another way of saying that it is entirely possible for one market to go up (the United States) and another to go down (the rest of the world), even if it hasn't happened. never happened before in history,” says George Saravelos, strategist at Deutsche Bank.
On the value side, several stocks suffered from the risk of customs tariffs. This is the case for the spirits groups Rémy Cointreau (-4.5%), very exposed to increased customs duties, and Pernod Ricard (-3.3%). Historically sensitive to trade tensions, auto equipment manufacturers Forvia and Valeo lost 3.6% and 3.1%.
Furthermore, Crédit Agricole SA lost 3.8%, suffering from disappointing results in the third quarter.
On the upside, Vallourec (+6.9%) was buoyed by Trump's victory, his desire to increase hydrocarbon production in the United States expected to translate into increased demand for tubes for the oil industry.
The defense groups Thales (+2.9%) and Dassault Aviation (+4.3%) are driven by expectations of an increase in European military budgets because the United States could further divert its military attention from Europe.
Publicis and Stellantis gained 1.7% and 1.8% respectively. These groups, very exposed in the United States, are on the front line to benefit from Trump's tax measures.
In other markets, the euro collapsed against the dollar, with a drop of 1.9% to 1.0729 dollars. Donald Trump's program is seen as inflationary and causes a rise in American sovereign rates, which catapults the dollar. Oil changes little. The January contract on North Sea Brent fell 0.3% to $75.33 per barrel while the December contract on WTI listed in New York was stable at $72 per barrel.
Julien Marion – ©2024 BFM Bourse
