The Parisian index had a tough session on Thursday, as the interest rate hike from the ECB caused a bit of an issue. The luxury sector continues to get hammered due to higher rates.
CAC 40
The CAC has fallen a bit during the trading session after initially trying to rally on Thursday, dropping towards the €8,100 level. This is an area that is beginning to see a bit of support at the moment. Ultimately, this is an area that needs to hold the market.
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This is a market that has a lot of different things moving, but right now the biggest event is the ECB rate hike. The ECB raised its deposit rate by 25 basis points to 2.5% today, responding to renewed inflation pressure caused primarily by sharply higher energy prices. Eurozone inflation is now projected to average approximately 3% this year.
That's a difficult mix for French equities
We have higher interest rates, $100 oil, and weak growth. Today's modest rebound in the early part of the session was led by financials and select cyclicals rather than luxury names.
Some of the biggest movers to the upside included Orange, Société Générale, Schneider Electric, and TotalEnergies. To the downside, there were EssilorLuxottica, L'Oréal, and LVMH. It's the same story: luxury gets whacked as fears of the Chinese and Middle Eastern customers struggling are still the story at this point in time.
The 10-year in France is now at 4.43% and looks to be rising. With this being said, we are now getting close to a major support level. We'll have to see if it holds. A bounce from here could be interesting, but we also have to see the market bounce first before trying to jump in front of this falling knife.
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