Seemingly indifferent to the slowdown in growth and geopolitical uncertainties, the Paris Stock Exchange crossed the symbolic threshold of 8,000 points for the first time in its history on Thursday, March 7th. The CAC 40 index has thus increased by nearly 6% since January 1st.
The Parisian market is far from being the only one experiencing a buoyant start to the year: the Frankfurt Stock Exchange is also reaching unprecedented levels, Tokyo's market has surpassed its 1989 peaks (during a speculative bubble in Japan), and on Wall Street, the Dow Jones, Standard & Poor's 500, and Nasdaq indices have all recently reached record highs.
The driving force behind this simultaneous surge lies in a combination of factors, starting with the decline in inflation on both sides of the Atlantic, which raises hopes for a decline in interest rates by summer, seen as favorable for stocks. In the minds of investors, this hope is taking precedence over the mixed economic outlook.
"The market is looking at the glass as half-full. Rate cuts are coming and there is no recession in Europe, even if growth forecasts are lowered," explained Alexandre Baradez, Head of Market Analysis at IG France.
International heavyweights
This disconnect between stock market trends and economic conditions is also explained by the highly international nature of major index components. "The stocks that make up the major indices belong to very international companies," notes Bertrand Lamielle, CEO of Portzamparc Gestion. "Stellantis, for example, which has been performing well since the beginning of the year, benefits from the American economic situation." The shares of the parent company of Peugeot, Fiat, and Chrysler have gained 14% in the first two months of the year.
More generally, the results released by large publicly traded companies since mid-January have exceeded expectations (by 7% for the S&P 500, according to Barclays analysts' calculations), which the market has sometimes generously rewarded.
In Paris, the stock price of luxury group Hermès reached record highs after announcing a 28% increase in its annual net profit, allowing it to surpass L'Oréal in market capitalization, at over 240 billion euros.
However, the most spectacular performance remains that of the American company Nvidia: the computer processor designer, indispensable in the booming artificial intelligence market, saw its stock soar by 16% on February 22, following the publication of its quarterly earnings. The company's value skyrocketed by 280 billion dollars in just one day, approaching the 2 trillion mark.
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