The CAC 40, the flagship index of the Bourse de Peers, broke a new record on Tuesday December 12. It exceeded the threshold of 7,500 points during the session, despite the complicated geopolitical context in which we currently live.
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The Stock Exchange is a photo of a specific moment. What is this photo today? In France, apart from the debates around inflation and purchasing power, security and immigration: nothing on the economic level is really worrying. And then the Paris market is mainly composed of values directly linked to global growth such as luxury (LVMH, L’Oréal, Hermès, Kering), defense (Dassault, Thales), and tourism (the hotelier Accor, the Cie des Alpes, etc.), far from strictly French concerns.
Growth sectors
Defense companies, it is a fact, benefit from geopolitical tensions: military budgets are increasing everywhere and equipment manufacturers are benefiting from it. Tourism: despite this tense context, travel is picking up again, demand is strong… which is beneficial for hospitality and leisure businesses.
There is also what investors expect from monetary policies on both sides of the Atlantic. Operators have their eyes fixed on the Central Banks (Federal Reserve in the United States – the FED –, the ECB in Europe, etc.). Will these institutions finally slow down the rise in interest rates initiated in recent months to fight inflation?
Everyone is optimistic. The market considers that we are finally going to enter a cycle of falling rates, which boosts investor morale because, when interest rates fall, financiers regain a taste for risk and buy shares on the stock market. Hence the rise in the markets. This is the phenomenon we are witnessing today.
Long-lasting effect
As the saying goes, “In the Stock Market, the trees never reach the sky.” When markets rise, there is always a point where investors take profits and the markets fall. The variations are sometimes significant but the ups and downs are logical. For reference, since the start of the year, the Peers Stock Exchange has gained 17%. And it’s not finished.