Since the beginning of the year, the Nasdaq index, the Technology Stock Exchange, has lost more than a quarter of its value (27%), that of the Dow Jones 15%, that of the CAC 40 18%. All over the planet, stock markets are at half mast, with vertiginous falls for certain stocks. Since early January, Netflix has lost more than 70% of its value. If no one is talking about a crash, the slowdown is very clear, after a period of euphoria lasting almost two years, which occurred in the very particular context of the Covid-19 pandemic.
But, with the sudden upturn in consumption, causing supply chains to clog up, inflation kicked in, forcing central bankers to raise rates one after another. However, for Catherine Garrigues, director of European equity management at Allianz Global Investors, “When rates go up, equity markets go down, it’s a historical correlation. For once, this crisis is clear, we knew it would happen. Equity markets were not speculative. They knew that the rates were not going to stay at this level”. And the outlook is not encouraging: on July 13, the United States announced inflation at 9.1%, a record in more than forty years, without knowing if the peak has been reached or if the worst remains. coming.
The crisis could worsen further, as the season for quarterly results for listed companies approaches. “Companies are approaching the crisis with a historically high level of profitability. But now they will have to absorb additional costs: rising energy prices, the cost of seized supply, the need to regionalize supply chains, wages that will have to be reassessed . The margins will act as a shock absorber”poursuit Mme Guarrigues. For her, the level of withdrawal of the equity markets is however in the order of the volatility accepted on the financial markets, but the recovery could not occur before six months.
Wall Street could drop another 15% to 20%
“The slowdown is starting, but it’s not quite there. The initial source is inflation, but it is aggravated by economic factors, such as the war in Ukraine, observes Stanislas de Bailliencourt, associate manager at Sycomore AM. What is likely to happen is a slowdown in the economy, due to increases in credit, energy and supply costs, which will affect a possibly too high earnings outlook. We risk having a readjusted, more cautious outlook. »
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