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The Paris Stock Exchange posted a fall of nearly 1% on Friday, with a weekly decline of 0.93%. The index fell by 0.56 points on Friday, ending one of its most complicated sessions of the beginning of the year at 5,559.57 points. Faced with the worsening of the pandemic, health constraints are multiplying and weigh heavily on economic activities.
All the more so as the first results of the monthly IHS Markit PMI surveys of January revealed Friday an acceleration of the contraction of the private sector in the euro zone since the beginning of 2021. The composite PMI indices (industry and services) fell to 47.5 points in January, against 49.1 in December, according to its calculations. A figure below 50 points indicates a contraction in activity.
“A double-dip recession now seems inevitable for the eurozone economy, as tougher measures to contain the spread of the virus continue to weigh on business performance”. according to Chris Williamson, chief economist at IHS Markit.
The Parisian index only followed the pace of its neighbouring markets. The Asian markets also experienced a decline: the Nikkei 225 of the Tokyo Stock Exchange closed down 0.44% and the Hang Seng of the Hong Kong Stock Exchange fell 1.6%. In Frankfurt, the Dax was down 0.79% and in Milan, the FTSE MIB was down 1.82%.
On the other hand, the American and London markets are doing better: Wall Street set new records with the institution of Joe Biden and closed cautiously at the end of the week. Over the week, the Dow Jones thus progressed by 0.6%, the S&P 500 by 1.9% and the Nasdaq Composite by 4.2%.
Although the London Stock Exchange ended up falling – the FTSE-100 index fell by 0.30% – the London Stock Exchange remains attractive and intends to take advantage of Brexit to rival New York and Hong Kong.
In the middle of the week, the luxury goods sector retained its position as the driving force behind the Parisian financial market : LVMH, Hermès and Kering had all gained between 0.7% and more than 3%, notably thanks to sales by Richemont, which reported a 1% increase in turnover at the end of December (+5% at constant exchange rates). In Zurich, Richemont advanced by 3% on Wednesday. A trend also encouraged by Burberry, which granted itself 4.8% in London, while its sales swelled at a high price in the third quarter after phasing out its promotions in order to improve its image.
On Friday, LVMH followed this trend by closing with an increase of 0.77%, Hermès remained stable, but Kering on the other hand posted a decline of 1.13%.
The deterioration in the health situation has had serious consequences since the beginning of the year. Indeed, the CAC 40 has been at its lowest level for a month and has continued to fall over the weeks. The CAC 40 has thus registered a second week of decline in a row.
China is experiencing a serious resurgence of the virus. In France, a test will be imposed on all travellers and a third confinement is on the horizon. In the United States, the latter will be subject to a quarantine, and in Europe, the situation is “very serious” overall, according to the president of the European Commission. In the United Kingdom, Boris Johnson has not ruled out extending the current confinement until the summer.
Between difficulties in deploying vaccines and outbreaks of variants of the virus, investors have more and more reason to remain wary, especially as governments are tightening up current measures.
It should be noted that the Italian political situation is not without influence in the minds of investors: the possibility of early parliamentary elections has been raised while the Prime Minister still does not have a clear majority in the Senate.
All these factors thus generate mistrust in the minds of investors, blocking the European markets but not the American markets.
Uncertainty about the health situation, but also situations such as the Brexit or the Italian elections, make it difficult to make predictions.
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