The flagship CAC 40 index dropped 60.94 points to 7,123.88 points. It had lost 0.40% on Friday and 2.63% on the week.
"The guiding principle since Thursday, and which will accompany us for a long time is the subject of central banks, including the Federal Reserve (Fed), which fuels the continuation of the rise in rates" on the bond market, comments Guillaume Chaloin, director of equity management at Delubac AM.
Last week, the US monetary institution announced that it would keep rates in the range of 5.25-5.50% while forecasting a further hike by the end of the year, and rates slightly above 5.0% in 2024, a higher level than expected.
However, "if rates rise, it means that money is more and more expensive, so that the financing of economic activities" is more expensive, explains Guillaume Chaloin.
In this configuration, the equity market is losing ground to the bond market, where the yield on 10-year US government bonds rose to 4.53%, its highest level in nearly 16 years.
In Europe, the interest rate on the ten-year German government bond stood at 2.79%, after reaching its highest level since July 2011 at 2.81% earlier. The French equivalent has also reached a peak since January 2012 (3.36%).
Kering shares fell 4.54% to 439.55 euros, the biggest drop in the CAC 40, after a note from Bank of America downgraded its recommendation on the stock.
Its Gucci brand unveiled Friday the first collection of its new creative director Sabato de Sarno, which is a "good starting point for a new chapter of design," according to RBC analysts.
In addition, "a good part of Kering's result comes from Gucci and the brand is very present in Asia," explains Mr. Chaloin.
However, the Chinese real estate developer Evergrande has announced a blockage in its restructuring plan to ensure its survival, which has revived investors' concerns about the economic recovery of the world's second largest economy.
Sensitive to the Chinese market, other luxury stocks declined in Paris: LVMH lost 2.59% to 713.30 euros, Hermès 3.36% to 1,732.80 euros. Cosmetics giant L'Oréal dropped 1.72% to 391.50 euros and EssilorLuxottica 1.30% to 165.78 euros.
© 2023 AFP