The stock markets have been brought in recent months by the support of central banks, which have made the cash flow from the spring of 2020 to ensure that a financial crisis is not added to the crisis. Sanitary related to Covid-19.
Le Monde with AFP
This is a first since its creation in 1987. The CAC 40 index, the main stock market index of the Paris Stock Exchange bringing off forty flowers of the French economy, has exceeded, Friday, November 5, shortly after the opening, 7,000 points, standing at 7,018.31 points.
This week, the Parisian square has chained the records: the CAC 40 first exceeded Tuesday its closing record, which was 4 September 2000, settling at 6,927.03 points, against 6 922.33. Twenty-one years), before dethroning, the next day, his highest absolute reaches in the same day (6,948,27 points).
Support from central banks
The records of the Paris index are due to “a favorable rate environment and the results of solid undertakings in a context of strong economic recovery,” says Daniel Larroutur, Manager of Dôm Finance. The Paris Stock Exchange and other stock markets have been carried in recent months by supporting central banks. The latter have shed flowing money since the spring of 2020 to ensure that a financial crisis does not add to the CVIV-19 health crisis. The markets have also been doped, from November 2020, by the arrival of Vaccines against COVID-19, which paved the way for a crisis exit.
The good results of companies in the third quarter, “with spectacular rebounds in many sectors, both at the level of activity and results,” says Larrouturou, then allowed the Parisian index of Climb the last steps.
End of unlimited cash
However, the era of almost unlimited liquidity is coming to an end. The Central Bank of the United States, the Fed, formalized Wednesday the reduction of its asset redemption program.
But the markets seem to be satisfied because the President of the Fed, Jerome Powell, assured that the pace of purchase reduction was adjustable according to the economic situation and that it was not yet time to think of an increase in key rates.
Could
CAC 40 continue to go up, while it already has a 26% increase since the beginning of the year? “Very hard to say, for Frédéric Rozier, Portfolio Manager at Mirabaud. “The major risk is to have, at a given moment, strong inflation and interest rates drifting that would rise too fast, too strong and could do damage on the market,” explain-T -He.
Currently low rates make unprofitable obligations and encourage investors to turn more towards actions, which would be less sought after in the event of lower rates.
Bearer luxury
The manager dismisses, in any case, the risk of bursting of a bubble as was the case in 2000. The record, reached after three years of rising values related to new technologies, had been followed by the collapse of the valuations of the internet bubble, resulting in a major krach. “The big difference compared to 2000 is that the market was concentrated on some technological values, some of which have disappeared since. Rather perspective, says Mr. Rozier. Today the situation is different, which is The market is real. “
Investors purchase the actions of companies with good performance, such as luxury or those related to the energy transition. The sharp rise in luxury values, which weigh more than a quarter of the Parisian rating, has also contributed to the CAC 40 has been better since the beginning of the year than the other major European squares or American. The LVMH group alone is nearly 15% of CAC 40 capitalization, has taken 37% since January and Hermes, 67%. L’Oréal, which counts for about 10% of the CAC 40, jumped 33%.