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With European indices largely down today, the CAC 40 is following suite with a loss of 0.62%. France’s benchmark index opened today’s session down on Friday and has slipped slightly further behind since. Italy’s sovereign credit rating was downgraded by Canadian ratings agency DBRS over the weekend, which has acted as a drag on European banking stocks, especially those with higher exposure to Italy. A hard Brexit approach is expected to be intimated by British Prime Minister Theresa May tomorrow, which is also causing ripples of nerves in financial markets.
Further suggestions that Trump will adopt a protectionist stance when he becomes President of the U.S.A later this week, with comments made in interviews over the weekend with The Times of the UK and Germany’s Bild newspaper, are also having an impact. Last week he attacked the pharmaceuticals industry for drugs prices, promising to crack down on them, and this weekend he intimated that he will look to apply an import tax on automobiles and parts manufactured outside of the U.S., referring specifically to BMW’s plans to open a new factory in Mexico in 2019.
Trump’s threats towards the big German automobile brands have hit the share prices of automobile stocks across European and Asian car manufacturers, which have significant market share in the U.S., a big market for them. The CAC’s two automobile manufacturers, Peugeot and Renault, are down by 2.01% and 1.3% respectively today. Tyre-manufacturer Michelin has dropped by 1.42% and automotive spare parts manufacturer Valeo has slid by 0.98%.
By far the biggest gainer on the CAC 40 today is lense manufacturer Essilor whose share price has rocketed by 12.14% on merger news. Italian eyewear giant Luxottica, owner of brands including Ray-Ban and Oakley, has agreed a $46 billion merger with Essilor. Luxottica founder Leonardo del Vecchio commented:
“The marriage between two key companies in their sectors will bring great benefits to the market, for employees and mainly for all our consumers. Two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof.”
Del Vecchio will be the combined EssilorLuxottica’s largest shareholder with his family holding Delfin to own between 31% and 38% of the shares, which will be listed in Paris. No other company on the CAC 40 has gained more than 1% so far today.
