Paris Stock Exchange: Rate Hike Fears Weigh on CAC 40, Luxury and Steel Sectors Decline

A Tense Trading Session Amid Inflation Fears and Rate Pressures

The CAC 40 is trading lower at midday, at 7,957.76 points, down by 0.33%. Out of the 40 stocks in the index, 26 are declining, while only 14 are managing to advance. A similar tone is observed across other major European markets: Germany's DAX is down 0.10% during the session, and the London FTSE 100 is dropping by 0.34%.

The mood remains affected by the turbulent oil market, where Brent crude is holding above $100 and experienced an unprecedented intraday fluctuation of nearly $36 on March 10 — the highest record since the 1980s. Although crude prices have stabilized since then, the episode has reignited fears of a new inflationary shock, fueled by both surging energy prices and disruptions in the supply of agricultural fertilizers.

This context directly impacts monetary policy expectations. The yield on the German ten-year Bund has reached its highest point since October 2023, at 2.93%. Markets now attribute a 35% probability to a rate hike by the ECB as early as April, while operators no longer anticipate more than one rate cut by the US Federal Reserve in 2026. This prospect of a persistently high interest rate environment is weighing on the Paris stock market at the end of the week.

TotalEnergies and Publicis Lead, Danone and Defensive Stocks Hold Steady

In this predominantly bearish market, some stocks are standing out. TotalEnergies is up 2.19% to 71.94 euros, buoyed by a price target increase from Goldman Sachs, which raised its target from 68 to 75 euros while maintaining a neutral rating on the stock. The oil giant also benefits from ongoing tensions in the energy market.

Publicis is gaining 1.98% to 76.36 euros, driven by its results and the announcement of the acquisition of AdgeAI, a specialist in creative performance measurement and content intelligence. This move aims to strengthen the communications group's AI-powered production platform.

More broadly, defensive stocks are holding their ground: Danone is up 1.31% to 71.16 euros, Engie 1.28% to 27.71 euros, and Orange 1.11% to 17.37 euros. These profiles tend to be favored by investors when macroeconomic uncertainty prevails.

Luxury, steel, and banking at the back of the pack

On the downside, there's a wide range affecting various sectors. ArcelorMittal posted the sharpest decline, falling 2.31% to 45.65 euros. The steelmaker, sensitive to global growth prospects, suffers from the general atmosphere of caution.

The luxury sector is also taking a hit: Kering dropped 2.05% to 250.50 euros, L'Oréal fell 1.86% to 352.55 euros, and EssilorLuxottica slipped 1.85% to 206.90 euros. These discretionary consumer stocks, whose valuations are sensitive to interest rate changes, are feeling the full impact of tightening monetary expectations.

Société Générale rounds out the biggest losers on the CAC 40, declining 1.61% to 64.60 euros. Despite theoretically benefiting from rising rates, the bank is not immune to the widespread mistrust affecting the market this Friday.

On Wall Street, the Dow Jones closed Thursday stable at 47,417 points, and the S&P 500 at 6,775 points. In Asia, the Nikkei 225 ended Thursday's session down 1.04%, while the Hang Seng fell 0.70%. The end of the week is shaping up to be relentless for European markets, caught between uncertainties in the energy sector and nervousness over interest rates.