The CAC 40 drops 4% on the Paris Bourse due to fears over a new variant

The coronavirus continues to wreak havoc and raises new fears. The Paris Bourse cracked at the start of the session Friday, November 26, falling more than 4.03%, caught up like other world markets by the emergence of a new variant particularly contagious in South Africa. The flagship CAC 40 index fell 285.26 points to 6,790.61 points around 9:30 am, canceling its gains since the beginning of the month. “Black Friday turns into Red Friday”, sums up Christian Parisot, broker Aurel BGC.

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Elsewhere in Europe, the trend was similar with losses of over 3% in London or Frankfurt. The movement, visible in all financial places in the world, was triggered after the announcement of the detection of a new variant of Covid-19 in South Africa, called for the moment B.1.1.529. It has the potential for very rapid spread, according to scientists, who at this point do not know whether currently available vaccines are effective against it.

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On Thursday evening, the United Kingdom announced that it would ban entry to travelers from six southern African countries at 1 p.m. Germany has announced for its part to refuse entry into its territory from Friday evening to foreign travelers from South Africa, Italy extending this ban to a total of seven southern African countries.

Multiplication of health restrictions

“For two weeks, health concerns have returned to the market. In the state of mind of the last few days, we felt a form of mistrust, without going as far as stress, with for example an increase in volatility”, explains to AFP Alexandre Baradez, IG France analyst.

Despite the health restrictions already tightened in many European countries, going as far as re-controls, macroeconomic concerns about inflation, or even the announced decline in central bank support measures for the markets, investors “could expect a a little more significant moment to take profits “, and the announcement of a new variant was finally the trigger, he believes.

Especially since the Parisian index has been evolving for several weeks at historic levels, having reached 7,183 points in mid-November.

Leisure and travel companies plunge into the stock market

In addition, the movement may be accentuated “with the low liquidity available” on the markets currently, said Michael Hewson, analyst at CMC Markets. After a holiday Thursday for Thanksgiving, Wall Street only opens for half a day on Friday.

Investors headed for the bond market, a place of refuge in times of uncertainty: the interest on the French 10-year loan fell to 0.05%, against 0.12% at the close the day before.

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On the equity market side, values ​​related to leisure and travel were particularly affected: Airbus lost 13.59%, Safran 10.69%. In transport, Renault fell by 7.72%, and Stellantis by 5.79%. The Unibail-Rodamco-Westfield property collapsed by 13.55%. Even luxury, heavyweight in the rating, was in sharp decline: LVMH yielded 3.97%, Kering 4.45%.

The only value in the spotlight on Friday, the French giant of analysis laboratories Eurofins Scientific soared 6.32%.

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