(BFM Bourse) – The Parisian index is falling sharply this Friday at mid-session, weighed down by the decline in luxury which is penalized by the results of Richemont. Investors are also digesting the outcome of the Fed meeting which, as expected, lowered its rates by a quarter of a point.
Difficult session for the CAC 40 this Friday. The Parisian index dropped 0.63% to 7,379.09 points at mid-session. Over the week as a whole, the CAC 40 is currently losing 0.5%.
Investors are digesting the outcome of the meeting of the American Federal Reserve (Fed). The central bank, as expected, lowered its key rates by 25 basis points (0.25 percentage points). During the press conference, its president, Jerome Powell, answered “no” (without saying more) to a question asking him if he would resign in the event that Donald Trump, the American president-elect, pressured him to leave his post.
“Jerome Powell once again indicated that monetary policy was still too restrictive. As a result, the Fed had to continue the path towards neutrality (therefore continuing to lower key rates), while inflation continued to decline and the “The labor market had normalized, according to him,” explains Sebastian Paris Horvitz of LBPAM.
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Kering suffers
“Also, as could be expected, the Fed Chairman stressed that at this stage the Fed had not integrated the possible impacts of the policies proposed by Donald Trump. This will be done, if necessary, when measures will be taken by the government,” he adds.
The drop in the CAC 40 is mainly due, this Friday, to the poor performance of its flagship compartment, namely luxury. Kering lost 6%, Hermès 3.5% and LVMH 3.2%. L'Oréal, sometimes associated with the world of luxury, fell by 2.7%.
French groups may suffer a negative cross-reading of the disappointing results of the Swiss Richemont, which lost 4.15% in Zurich.
“The entire luxury sector may fall on the stock market this Friday, following comments from Richemont management. Johann Rupert, the president, explained that he was confident in the group's ability to navigate the current cycle while while being 'cautious', the good news, given his statements, is that the slowdown remains cyclical. But the bad news is that it confirms that we are at the bottom of the cycle. 'explained the management, we has no visibility on the recovery of this cycle”, explains Jie Zhang, analyst at the independent research firm Alphavalue.
“The new general director, Nicolas Bos, also highlighted the lack of visibility in China, particularly on the real estate side which remains an important piece of the puzzle of Chinese wealth,” she adds.
Another analyst puts forward another possible explanation: profit taking. “Luxury stocks had progressed well in recent sessions, particularly on Thursday. However, there are currently many unfavorable elements,” he indicates.
“In China, the situation seems quite catastrophic, and we wonder if a structural change in the consumption of luxury goods by the Chinese is not taking place. Customs taxes in the United States, wanted by Donald Trump, risk putting margins under pressure if luxury groups do not pass on these surcharges to consumers, and Europe is increasing taxes,” explains this analyst.
As for other stocks, JCDecaux fell by 9.4% after delivering disappointing outlooks for the fourth quarter.
Euronext lost 0.9% after having delivered its medium-term objectives, notably aiming for an increase in its Ebitda by 2027 lower than expectations, according to Jefferies.
On other markets, the euro fell 0.2% against the dollar to 1.0778 dollars. Oil is falling. The January contract on North Sea Brent fell 0.95% to $74.91 per barrel while the December contract on WTI listed in New York lost 1.27% to $71.44 per barrel.
Julien Marion – ©2024 BFM Bourse
