Market tracker - 16 February 2009 - 16 March 2009

Commentary

- Between the 16 February and 16 March, stock markets recorded 14 days of decline, which of which were in a row (16-25 February). On 20 February the CAC 40 index slumped by 4.25%, due to the sharp fall of financials and the downgrading of Michelin and PSA Peugeot Citroen's credit rating. A recovery occurred on 4 March (a 4.7% increase on a historical low point of 2554.55 pts was recorded on 3 March). This was supported by Wall Street which opened higher and by the announcement of good results by Suez Environnement, France Telecom, Vinci and Eurotunnel.

- An announcement on 5 March of a new cut in interest rates by the ECB & BoE (-50bp to 1.5% and 0.5% respectively), was roundly ignored by investors, who were more concerned by the estimated decline of growth in the Euro Zone for 2009 (a range of -2.2%/-3.2% GDP growth). Bank stocks had a negative impact on the CAC 40, Dexia being the main culprit with a '-21.02% intraday' due to its exposure to Eastern European banks.

- The CAC 40 has since regained +8,64% over eight days owing to reassuring comments from US Banks and the head of FED (expressing optimism for first recovery signs of the economy in early 2010).

- The equity primary market remains very active in Europe with EUR52bn of capital increases achieved or planned since the beginning of the year. In France, Saint Gobain launched a EUR1.5bn capital increase, which enable the group to strengthen its balance sheet and keep its credit rating.

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