Europe: Shares end higher as earnings barrage impresses
EUROPEAN shares closed higher on Friday, boosted by an earnings-driven advance across several sectors including luxury, while global markets remained stable after data showed an improving US inflation picture.
The pan-European Stoxx 600 index closed 0.8 per cent higher after hitting a more than two-month low in the previous session, logging a marginal weekly advance of about 0.5 per cent.
EssilorLuxottica jumped 7.4 per cent after the Ray-Ban maker’s CEO said Meta had told him it might take a stake in the company, while Hermes rose 3.4 per cent after slightly beating second-quarter sales expectations.
A gauge of 10 of Europe’s biggest luxury names advanced 2.9 per cent, logging its biggest single-day jump in six months.
Construction and materials led gains amongst the major Stoxx sectors, adding 1.7 per cent, with France’s Vinci up 3.5 per cent after the highway operator posted first-half revenue growth and margin expansion.
Meanwhile global markets remained sanguine after data showed US prices rose moderately in June, underscoring an improving inflation environment that potentially positions the Federal Reserve to begin cutting interest rates in September.
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“Today’s PCE number gives more evidence that we’re on the downward slope in terms of inflation,” said David Russell, global head of market strategy at TradeStation.
Following the data, expectations rose that the Fed might use its meeting next week to signal that it could start cutting interest rates in September.
Europe’s benchmark index ended the week mostly subdued as a barrage of downbeat earnings including luxury heavyweight LVMH, carmaker Stellantis and Nestle earlier in the week offset rebounding tech shares.
Autos was the worst performing sector this week, while health care was the best with a 2.2 per cent weekly gain.
Among other headlining stocks, French IT consulting group Capgemini lost 2.5 per cent, forecasting a surprise fall in annual revenue.
Hexagon shed 3.3 per cent after the Swedish industrial technology group reported second-quarter results below expectations and said the slowdown in construction and automotive markets would continue to weigh on the trading environment in the third quarter.
Konecranes jumped 14.2 per cent to the top of the Stoxx 600 after the Finnish engineering group reported second-quarter profit that beat analysts’ estimates.
The UK’s NatWest added 7 per cent after the lender said it has bought a £2.4 billion (S$4.2 billion) mortgage book from Metro Bank and upgraded its performance outlook for the year. REUTERS
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