The Paris Stock Market could fall to its level of November 2010 Monday after hitting the lows of the year, the results of stress tests of banks have not dispelled the fears of contagion from the crisis of sovereign debt in euro area.
Near close, the CAC 40 index fell by 1.73% to 3662.40 points, after falling to 3648.76 points, its lowest level this year, weighed down by banking stocks, which represent nearly 13% of benchmark index of the Paris, and the lack of credibility of resistance testing (“stress tests”) awarded by the European financial institutions.
“The market reacts to the lack of credibility of stress tests, which have not sufficiently taken into account the potential impact of sovereign risk, although their results were better than expected in appearance,” said Stanislas de Baillencourt manager at Sycamore Asset Management.
“This also occurs in a context of uncertainty in the United States on the federal budget negotiations,” he adds.
Consequently, according to a graphical analysis, the CAC 40 should continue to decline especially since the index is oversold and that it has opened a new “gap continuation” – gap in transactions between sessions marking the continuation of a trend – after that of Monday.