6,500 points. For the first time since September 2000, and only the second time in its history, the CAC 40 crossed this symbolic threshold in session Tuesday, driven by the global economic recovery. The flagship index of the Paris Bourse, however, ended the day slightly below this threshold, at 6,489 points.
In a few months, the CAC 40 has erased the traces of the Covid crisis to return to its highest historical levels. Since the start of the year, it has soared by nearly 17%, one of the best performances of the major world stock markets.
A crisis quickly erased
Who would have bet on such an outcome barely a year ago? Europe was then just coming out of its first confinement. The multinationals of the CAC were accumulating losses: at the end of June, they had generated no profit, with activity falling by 20%.
But after the stock market panic caused by this unprecedented pandemic, calm quickly returned to the markets, reassured by the rapid and massive intervention of central banks.
Over the months, the economic outlook has brightened despite new epidemic waves. Massive stimulus plans have been put in place, for the first time including at European level. The latter was formally validated by the 27 countries of the Union last week.
Uneven impact of the pandemic
It was finally the arrival of effective vaccines, barely six months after the first confinements, which allowed the Paris Bourse to start again. The rapid advance of vaccination campaigns in recent weeks completed the picture, pushing the Paris Stock Exchange to its highest levels: the business climate in France exceeded its pre-crisis level in May.
In the meantime, the CAC 40 has rebounded by more than 70% since its low point reached on March 18, 2020. It is even up more than 6% compared to its pre-crisis peak at 6,111 points on February 19.
An increase far from uniform. Over the period, nearly a third of the ACC lost ground. Hard hit by the crisis, the specialist in commercial and office real estate Unibail-Westfield-Rodamco remains in fall of more than 40%.
Luxury driving the rebound of ACC
Another victim of the crisis, aeronautics: Airbus (-17%), Safran (-15%) or Thalès (-12%) are still blaming the blow. However, the prospect of reopening borders and resuming commercial aviation has allowed them to regain strength in recent days.
Among the winners of the crisis, luxury has fared well. Hermès and LVMH have increased by around 60%, L’Oréal by more than 35% and Kering by more than 25% since February 2020. Together, they contributed more than 500 points to the rise of the CAC 40, making more than offsetting all the decreases. LVMH’s capitalization has soared from 220 billion in February 2020 to more than 330 billion euros, making it the largest listed company in Europe.
The luxury giants have withstood the pandemic especially well. Highly exposed to Asia, they have benefited from the rapid recovery in consumption in China, which was the first major economy to keep the epidemic under control. They have also embraced digital distribution, allowing them to mitigate the impact of store closings.
The historic record just a stone’s throw away
After these huge gains, can the ACC hope to exceed its historic record? On September 4, 2000, when the Internet bubble was bursting, it had reached 6,922 points. It would have to climb a further 6% to regain this peak. Nothing is impossible, but these few percentage points may be more difficult to conquer as the rebound in inflation makes some market professionals fear the worst.
“The equity markets have high valuations and analysts’ expectations remain high, because they anticipate good economic growth over the next two years”, explains Christian Parisot at Aurel BGC. “There is therefore little room for a significant increase in stock market indices,” he adds.