Michelin Shares Decline by 3.49% Mid-Session, Weighed Down by Surge in Crude Oil
Michelin shares significantly dropped this Tuesday, March 3, falling 3.49% to 31.77 euros mid-session, after closing at 32.92 euros the previous day. This decline is part of a broader correction, with the stock showing a nearly 6% drop over the past seven days. The tire manufacturer is struggling in a market environment disrupted by geopolitical tensions in the Middle East.
Impact of Crude Oil Prices on Michelin
The day's drop in Michelin shares comes as crude oil prices see a significant surge, with Brent reaching $80.14 per barrel, up nearly 10%. This spike in energy prices, triggered by military operations in Iran and the bypassing of the Strait of Hormuz by major shipping companies, directly affects the production costs of tire industry players. Synthetic rubber, an essential raw material for Michelin, is indeed a petrochemical derivative whose price correlates with that of crude oil. Additionally, the lengthening of commercial maritime routes increases logistical costs. On the stock market front, European markets are showing declines between 1 and 3%, a retreat considered moderate by observers given the magnitude of the geopolitical shock. Despite a low beta of 0.12, indicating historically limited sensitivity to general market movements, Michelin's stock does not escape the correction. Upcoming financial calendar milestones for the group, particularly the first-quarter sales report scheduled for April 29, could provide more visibility on the actual impact of this energy price increase on margins.
Technical Analysis of Michelin's Stock
From a technical standpoint, Michelin's stock price has reached the lower boundary of its Bollinger Bands, located at 31.81 euros, signaling a short-term bearish stretch. The stock is now trading below its 20-session moving average (33.44 euros) and is approaching its 50-day moving average, set at 31.11 euros, which could serve as a potential first support. This level remains above the support threshold identified at 29.55 euros. The RSI, an indicator measuring the momentum of a stock, is at 52, representing a neutral zone that neither signals excessive bullishness nor pronounced overselling. Over three months, the stock has still gained more than 12%, driven by a rebound that began at the end of last year, while the performance over one year remains negative at -7%. The resistance level to watch is at 34.48 euros, a level at which the stock had previously peaked. The monthly volatility, at 8.48, indicates moderate but accelerating oscillations in light of today's session.
