Europe: Stocks end higher as LVMH drives luxury rally
EUROPEAN stocks closed higher on Wednesday as France’s LVMH sparked a rally in luxury goods groups and eased concerns that slowing global growth and tariffs are hurting corporate health.
LVMH shares rose 12.2 per cent, their biggest one-day jump since January, after the owner of Louis Vuitton and Dior reported better-than-expected third quarter sales, driven by improved demand in China.
“We think the results are really positive for the sector and probably the peak bearishness is behind us,” said Benedicte Lowe, equity derivatives strategist at BNP Paribas.
LVMH is considered a bellwether for the luxury sector, which has undergone a prolonged slump since the winding down of the post-pandemic boom.
Other luxury stocks such as Hermes, Kering, Richemont and Moncler rose by between 4.7 per cent and 7.8 per cent. The rally is expected to have added some US$80 billion to the market capitalisation of the top 10 firms in the Stoxx Europe Luxury index, Reuters calculated.
The luxury-heavy French blue-chip index rose 2 per cent, while the Europe-wide Stoxx 600 index closed 0.57 per cent higher to 567.77 points.
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Among other companies reporting, ASML shares added 3.1 per cent after the world’s biggest supplier of computer chip-making equipment beat market expectations for third-quarter orders and fourth-quarter forecasts.
TotalEnergies climbed 3.7 per cent after the French oil major said it expects to report an increase in third-quarter results as higher upstream production and improving crude refining margins offset lower oil prices.
Third-quarter earnings estimates for Stoxx companies have improved in recent weeks, with analysts forecasting a 0.5 per cent rise in profit growth on average, LSEG IBES data shows, compared with a 0.6 per cent drop seen at the start of the earnings season.
This is still a sharp deterioration from the 7.8 per cent growth seen in the third quarter of 2024.
BNP Paribas’ Lowe said the European blue-chip results indicate “the worst point” in the earnings cycle might have passed and investors could focus on “the upside story”.
Largely positive earnings reports from big US banks on Tuesday and comments from Federal Reserve Chair Jerome Powell that boosted bets of rate cuts this year, fuelled the upbeat mood.
Stellantis ended 3.2 per cent higher after announcing a new US$13 billion US investment plan that investors and analysts say could help the carmaker counter painful US tariffs.
However, German copper producer Aurubis shed 6.5 per cent, with a trader pointing to majority shareholder Salzgitter launching a 500 million euro bond offer exchangeable for Aurubis shares as the reason for the drop. REUTERS
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