(News Bulletin 247) – The CAC 40 is still in the red this Friday at mid-session and is heading towards a weekly drop which could be around 3%. The rise in bond yields is still weighing on the market.

It is time for this week to end for the Paris Stock Exchange. The CAC 40 lost another 0.8% to 7131.63 points at mid-session on Friday, bringing its weekly loss to 2.8% for the time being.

The market continues to be concerned about the rise in bond rates, itself triggered by the publication of the minutes of the last monetary policy meeting of the American Federal Reserve (Fed). This document showed that the members of the American central bank were still worried about risks to inflation and were considering tightening monetary policy further.

The yield on the US Treasury bond exceeded 4.3% on Thursday, the highest figure since 2007. It experienced a slight lull on Friday, returning to 4.22% but remains at a high level. Note that bond rates move in the opposite direction to bond values.

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Luxury is on the decline

“The relentless fall in bonds continues to be the biggest news story in the markets, and yields yesterday hit multi-year highs in several countries,” Deutsche Bank noted on Friday.

“There was no specific new catalyst, but the movement remained global, reflecting lingering concerns about inflationary pressures, the prospect of further rate hikes, and even attention to persistent budget deficits” , she continues.

These bond tensions came on top of concerns about the strength of the Chinese economy following a series of disappointing statistics. Separately, Chinese real estate developer Evergrande on Thursday night submitted the documents needed to file for bankruptcy, protecting its US assets from creditors ahead of a financial restructuring.

On the stock side, luxury groups are falling, as their relatively high valuation may suffer from both rising bond yields and concerns about China. LVMH sells 1.4% and Hermès 1.1%.

Spie (-1.1%) announced a new targeted acquisition by buying the German BridgingIT.

On the other markets, the euro lost 0.05% against the dollar at 1.0878 dollar. Oil contracts are currently sluggish. The October contract on North Sea Brent fell 0.18% to 83.95 dollars a barrel while the September contract on New York-listed WTI fell 0.02% to 80.36 dollars a barrel.