(BFM Bourse) – The Paris Stock Exchange is trading sharply lower this Tuesday as Vladimir Putin signed the decree expanding the use of nuclear weapons. The market therefore fears an escalation of the conflict between Ukraine and Russia.
The black streak seems to continue for the CAC 40, which fell by 1.2% to 7,193.60 points this Tuesday around noon.
While investors had somewhat diverted their attention from the conflict between Ukraine and Russia in recent weeks, this war returned to the forefront this Tuesday.
Russian President Vladimir Putin signed a decree on Tuesday expanding the possibilities of using nuclear weapons. Quoted by AFP, Dmitri Peskov, Kremlin spokesperson, considered that this decision was “necessary” in the face of “threats” from the West.
This decision by Russia comes two days after the Biden administration gave Ukraine a boost, allowing it to strike Russian soil with US long-range missiles.
Investors therefore fear an escalation of the conflict between Ukraine and Russia. “This is the only real reason for the market to fall this Tuesday: the growing tensions around Russia. In theory, the country can respond nuclearly if its territorial sovereignty is threatened,” observes Alexandre Baradez, market analyst at IG France.
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ADP flies over the market
This renewed geopolitical tension is leading to several market reactions. Sovereign bond yields are falling (and therefore the value of these securities is increasing), with investors fleeing somewhat into risk-free assets. The rate on the American bond fell by 6 basis points to 4.3464%, that of the same maturity for Germany eased by 6.6 basis points to 2.31%.
The euro for its part dropped 0.3% against the dollar, to 1.0567 dollars, because the greenback is also perceived as a safe haven.
On the equity side, 37 of the 40 CAC 40 stocks are in the red, with cyclical stocks in the tough, notably the car manufacturers Stellantis (-3.95%) and Renault (-3.1%).
Thales, a defense company, is floating a little (+0.59%) as is elsewhere, excluding CAC 40, Dassault Aviation (+1.1%).
Outside of the CAC 40, automotive equipment manufacturers, stocks sensitive to geopolitical risk, are falling again. Valeo lost 4.3%, Forvia lost 4.9% and OPmobility lost 7.4%. The former Plastic Omnium is, in addition, weighed down by Bernstein who initiated his advice on value at “underperformance”, equivalent to “sell” in his terminology.
Conversely, ADP gained 2.8% helped by Stifel which went from “hold” to “buy” on the stock this Tuesday.
Oil changes little. The January contract on North Sea Brent fell 0.7% to $72.77 per barrel while the December contract on WTI listed in New York lost 0.8% to $68.58 per barrel.
Julien Marion – ©2024 BFM Bourse
