Posted on Nov 5, 2021 9:41 AMUpdated Nov 5, 2021, 6:01 PM
Nothing can stop the CAC 40! The flagship index of the Paris Bourse crossed the threshold of 7,000 points for the first time in its history on Friday. He hit a new session record of 7,063.40 points, before posting a closing record of 7,040.79 points. With an increase of 0.76% on Friday, it recorded a seventh consecutive session of gains, a series unseen since April 2019.
The CAC 40 is one of the most dynamic stock market indices since the arrival of anti-Covid vaccines, just a year ago. It soared by more than 40% over the period, erasing in turn its pre-crisis peak and its historic record. The CAC 40 GR, which takes into account reinvested dividends, exceeded 20,000 points on Friday, again a new record.
Global markets in full euphoria
The support, monetary and budgetary policies, allowed it to forget in record time the difficulties related to confinements and activity restrictions. Never had he recovered so quickly from such a severe crisis.
The euphoria is not limited to the Paris Bourse. The German DAX exceeded 16,000 points for the first time during the week. The pan-European STOXX 600 index is also evolving at its highest level ever.
Equity markets are also celebrating across the Atlantic. The Dow Jones moved above 36,000 points, a new level. The S&P 500 and the Nasdaq have also chained new records at a breakneck pace since the start of the year.
Equity markets should remain positive given the absence of an alternative
Gilles GuiboutHead of European equities at Axa IM
Fears about inflation or the problems of shortages have faded in the face of the dynamism of demand. The VIX, the volatility index on Wall Street, which tends to soar in times of stress on the markets, has fallen in recent days to its lowest level since the stock market panic of March 2020, at the time of the first confinements in Europe.
Monetary tightening does not scare the markets
The prospect of tightening monetary policies has not troubled equity investors. The movement, already well underway in most emerging countries and some developed countries such as Canada or Australia, has not yet reached the Old Continent. The European Central Bank has confirmed in recent days its accommodative bias despite the rapid rebound in inflation, to its highest since 2008 in the euro zone in October.
The US Federal Reserve, for its part, initiated a gradual reduction in its asset purchases on Wednesday, a decision expected by the markets. But it still considers that the surge in inflation is linked to temporary factors, which a priori rules out the risk of a rapid rise in interest rates on the other side of the Atlantic.
Valuations have fallen despite soaring prices
“The recent rise in long-term interest rates remains lower than the rise in inflation,” underlines Gilles Guibout of Axa IM. They have even relaxed in recent days, after experiencing a rapid surge at the end of October. “The equity markets should remain well oriented given the absence of an alternative given the still very negative real interest rate levels,” he adds.
Another supporting factor: the very good results of companies coming out of the crisis. “The quarterly results season, which was generally very good, once again enabled expectations for the year to be revised upwards and the valuation multiples to be reduced accordingly to levels barely above the long-term averages. term, ”he explains. Something to reassure a little about the risks of a bubble on the equity markets.