Europe: Luxury firms, chipmakers lift Stoxx 600 to five-week high
EUROPEAN shares rose nearly 1 per cent on Thursday, with luxury stocks boosted by Richemont’s upbeat earnings update and semiconductor firms making gains after TSMC reported record quarterly profit.
The pan-European Stoxx 600 had risen 0.98 per cent to 520.05 points, its highest since mid-December.
France’s benchmark index, which includes major luxury stocks, rose to a near three-month high, outperforming other exchanges in the region.
Richemont shares surged 16.3 per cent after the owner of the Cartier jewellery brand beat quarterly sales expectations, a positive sign for the high-end luxury sector over the key holiday season.
A gauge of European luxury firms advanced 6.7 per cent, logging its best day in nearly four months. LVMH shares jumped 9.1 per cent, Dior rose 8.6 per cent, Kering gained 4.6 per cent and Hermes was up 4.9 per cent.
Deutsche Bank said the results will “add to the debate that the more premium luxury brands are likely to outperform, the luxury slowdown is more cyclical than structural (at least at the high-end) and that there is enough growth in the rest of the world to offset China weakness.”
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The tech index, which houses the bulk of European chipmakers, advanced 1.9 per cent after TSMC, the world’s largest contract chipmaker, logged a record quarterly profit and said it expects hefty first-quarter revenue growth.
The Stoxx index’s gain on the day added to a jump on Wednesday, its biggest single-day rise in four months, after an easing core US inflation reading kept potential rate cuts by the Federal Reserve on the table.
On the macro front, the European Central Bank needed to cut interest rates cautiously and gradually but further policy easing was likely coming given weakening price pressures, according to the accounts of its Dec 11-12 meeting.
“The level of expectations in Europe is relatively low and because of that there is a potential for some upside surprises,” Fiona Cincotta, senior market analyst at City Index.
Global markets have been on edge about the implications of US President-elect Donald Trump’s proposed policies, including trade tariffs, and as a strong batch of US data recently kindled fears of fewer Fed rate cuts.
After the inflation data, retail sales increased 0.4 per cent in December, compared with a 0.6 per cent rise expected by economists polled by Reuters.
Investors now gear up for the first wave of earnings in Europe and Trump’s inauguration on Jan 20.
Among other notable stock moves, Zalando rose 8.6 per cent after Europe’s biggest online retailer said it expected profit in 2024 to beat its own forecasts.
Orion added 7 per cent after the Finnish drugmaker hiked its 2024 revenue and operating profit outlook.
Airbus rose 1.8 per cent after Morgan Stanley named the planemaker its top pick among aerospace companies. REUTERS
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