CAC 40: the explanations for a report | EUROtoday

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HASSo, we’re again on this planet of economic optimism. Like a candy aroma of opium emanates from the buying and selling rooms. Trading wolves are already salivating over their future bonuses. And the small holders who inventory market to enhance their retirement are smiling once more.

All the identical, one could be shocked, because the shocks and risks are so quite a few. Just 2,700 kilometers from France, Ukrainians are preventing for his or her survival towards the Russian bear. Hardly a day goes by with out discuss of transferring Europe right into a “war economy”. After months of decline, unemployment is rising in France. And the Minister of the Economy, Bruno Le Maire, is anxious about decrease tax revenues than anticipated, which isn’t a very good signal.

However, as we now have mentioned, buyers preserve smiling! Convinced that our largest firms will proceed to generate efficiency within the coming months, they introduced the CAC 40 to its highest historic stage: 8,000 factors. For 4 years and the crash linked to the Covid-19 pandemic, the flagship index of the Paris Stock Exchange has greater than doubled, to the purpose of “weighing” 250 billion euros greater than the FTSE, its London equal. Cock-a-doodle Doo !

Two components justify this phenomenon: 1. The wonderful outcomes of our foremost enterprise flagships; members of the CAC 40 ought to exceed 140 billion euros in cumulative earnings for the third 12 months in a row. 2. The prospect that the European Central Bank will decrease key rates of interest earlier than the summer time.

The warfare in Ukraine not has an impression on the markets

That mentioned, how can we clarify the hole between low European development and these outcomes? Quite just by remembering that the first-in-class firms are multinationals. LVMH, Hermès, L'Oréal, TotalEnergies, Airbus… Our 5 finest capitalized corporations have the widespread level of producing the overwhelming majority of their revenues outdoors the borders of the Old Continent.

As for the warfare in Ukraine, it's unusual to say, however it has virtually no impression on the inventory market. “Somewhat cynically, the war in Ukraine only worried the markets when it impacted raw materials,” explains Alexandre Baradez, head of market evaluation at IG France. But now that gasoline costs have returned to pre-conflict ranges and oil and steel costs stay at regular ranges, this isn’t a significant concern. It would take a really robust occasion for it to turn into so once more. »

The excellent news, in response to some consultants, is that the “CAC” could be underneath management. As the each day reminds us The echoes, quoting JP Morgan AM chief economist Vincent Juvyns: “The CAC 40 is cheaper today than it was over the last ten years. » In fact, stocks in the index trade for 13.6 times expected earnings over the coming year, which is slightly below the ten-year average, and well below Wall's levels. Street, where S&P 500 shares trade at a ratio greater than 20. This is what also makes Alexandre Baradez say that the beautiful story could continue. “With a weak euro, the CAC 40 still has juice in the medium term. At two or three years old, he could pass the 10,000 points mark. »

In the United States, the bet on artificial intelligence is a caricature

What reassures this analyst is also that the growth of the flagship index of the Paris market is no longer based solely on luxury. “In Europe, the valuation on the Tech markets has increased by 16% since the start of the year. The other growing sectors were automobiles (+11%) and hotels and leisure (+9%), with luxury coming behind (+7%), which is new. » Will the star companies on the list be able to replicate their record results this year? Alexandre Baradez thinks so. “It may sound a bit cynical, but many have reduced their workforce in recent months, which has improved their profitability and compensated for their reduced ability to set prices. Furthermore, the latest German and Chinese statistics are encouraging. »

On the other hand, our specialist would not be surprised if the Nasdaq fell by 10% in the coming months. “In the United States, the bet on artificial intelligence is a caricature,” he believes. When we see the just about vertical curves that Meta or Nvidia shares have made, we will not advise folks to purchase them. The potential of AI is there, however not everybody will profit from it and we should wait to see how properly those that, like Microsoft with Open AI and Mistral AI, will promote these options to finish clients, will carry out. » We bear in mind the rocket takeoff, through the pandemic, of “Covid stocks” (Zoom, Netflix, and so forth.), whereas the market was betting on a generalization of teleworking. We additionally keep in mind that as soon as the fever handed, buyers got here to their senses.