CAC 40 Drops Amid Central Banks' Tightening Wave

A Session Influenced by Central Banks

The atmosphere is tense in Paris. On Thursday, the Bank of Japan raised its key interest rate to 1.25%, the highest in thirty-one years, just hours after the US Federal Reserve also tightened its policy. This coordinated global monetary tightening dampens the appetite for risky assets. There is a clear and widespread decline in European open indices: the DAX is down 1.38% during the session, the FTSE 100 falls by 1.35%, and the STOXX 600 drops 0.98%.

Across the Atlantic, the trend is more mixed. At the same time, the S&P 500 decreases by 0.08% and the Dow Jones by 0.37%, while the Nasdaq 100 holds slightly up by 0.17%. In Asia, however, the session ended in the green, with the Nikkei 225 closing this morning with an increase of 1.38%.

A Sharp Downward Dispersion

The imbalance is striking. Of the 40 values in the Paris index, there are only three increases against thirty-seven declines. The energy backdrop adds to the nervousness: Brent crude, around 105 dollars per barrel, remains buoyed by tensions in the Middle East, as oil tanker traffic through the Strait of Hormuz decreases.

At the top of the small group of gainers, STMicroelectronics rises by 1.86% to 43.23 euros, the only stock with a clear gain. Thales follows with an increase of 0.67% to 239.90 euros, the defense group benefiting from a buy recommendation confirmation from CIC Market Solutions, with a price target maintained at 305 euros. Eurofins Scientific rounds out this small trio with a gain of 0.47%.

Orange, banks, and automotive leading the decline

The bottom of the table reflects the bulk of the losses. Orange drops 5.08% to 15.15 euros, marking the biggest fall of the day. The telecom operator was downgraded by Morgan Stanley, which lowered its recommendation from « market weight » to « underweight » and reduced its target price from 16.50 to 15 euros. Additionally, the group announced the commissioning of the first European Telesat gateway in France, at its teleport in Bercenay-en-Othe.

The automotive sector is also suffering. Renault loses 3.97% to 27.80 euros, while Stellantis slides 3.46% to 4.29 euros. Despite this, the Franco-Italian-American manufacturer confirmed it will present nine concept cars at the Paris Motor Show. The sector's sensitivity to credit costs partly explains this pressure in the context of rising global interest rates.

Financial stocks are not spared either: BNP Paribas drops 3.26% to 100.40 euros. Meanwhile, Bouygues falls 3.05% to 43.48 euros, despite the announcement by its construction subsidiary of securing the second phase of the Yopougon University Hospital in Côte d'Ivoire for 95 million euros.