Published on Dec 29 2023 at 5:41 p.m.Updated Dec 29 2023 at 6:09 p.m.
This year 2023 is over on the stock market and the results are very appreciable for the Cac 40, which will have gained some 16.52% over the entire twelve months (+0.11% this Friday, to 7,543, 18 points). This is the third best performance of the flagship index over the last ten years. Only 2021 (+28.85%) and 2019 (+26.37%) have done better since 2014.
2023 will also go down as an excellent vintage on a global scale for the Paris Stock Exchange, which will have done better than the Dow Jones (+13.4% this Friday at the end of the day, a few hours before the close of the American markets), but, certainly, less well than the S&P 500 (+23.9%) and, above all, than the Nasdaq Composite (+42.9%), both having been driven by the flights of the “Magnificent 7” and the craze for stocks linked to artificial intelligence, Nvidia in the lead (+238%).
Monetary policy as a “driver”
In Asia, it was the Nikkei which recorded the largest annual increase in the region, climbing 28%, the first time for the Japanese index since 2013, the year when Haruhiko Kuroda took office as governor of the Bank of Japan and began massive monetary easing. Conversely, the CSI of the Shanghai and Shenzhen stock exchanges fell by 11.4% in 2023, the third consecutive year of decline, against a backdrop of slow post-Covid economic recovery in China.
Monetary policy was the main “driver” of this stock market year. While operators initially waited a long time for signs of an end to the cycle of monetary tightening, from the European Central Bank but especially from the American Federal Reserve, given its positive results in combating inflation, they then excited at the prospect of the first easing movements in 2024, with the most optimistic banking on a gesture from the Fed as early as March. Especially since it is the scenario of a “soft landing”, the most favorable for the stock market, which holds the rope.
History shows that the US economy has only managed to escape a recession on rare occasions after a cycle of monetary tightening by the Federal Reserve. The most frequently cited example is when the interest rate was increased in just over a year from 3% to 6% in March 1995. The American economy then slowed down, without entering into recession. , the growth of gross domestic product not falling below 2.2% over one year at the end of 1995.
14 records within the Cac 40
But 2023 will not have been a smooth ride for CAC 40 companies. We remember the 59% collapse of the payment solutions group Worldline during the session of October 25, the largest drop ever recorded. by a company in a single day in the history of the index, against a backdrop of revision of growth and margin objectives for the year, coupled with an abandonment of medium-term forecasts. Alstom, for its part, plunged 37% in a single day, after announcing that its free cash flow would be negative by 500 to 750 million euros at the end of its financial year ending at the end of March, against an initial objective of ‘a free cash flow’ significantly positive “. Call center manager Teleperformance lost another 41%, after its 43% setback already suffered in 2022.
As for the good performers, it was the car manufacturer Stellantis which took the lead with a gain of 59% over the year. It is followed by Saint-Gobain and Publicis, up more than 40%. Overall, it was the visibility and solidity of margins and order books that were praised by investors. 14 companies in the index have thus set new historic records: Stellantis, Publicis, Hermès, L’Oréal, Airbus, Safran, Air Liquide, Schneider Electric and Vinci during the month of December, at the same time as the Cac 40 recorded a new peak at 7,653.99 points on the 14th of the month. A little earlier in the year, four other stocks in the index had recorded new historic highs: LVMH, the undisputed leading market capitalization, and Pernod Ricard in April, Edenred in June, Thales in October and TotalEnergies in November.