Europe: LVMH, Remy Cointreau results boost European shares to 2-year high
EUROPEAN shares rose over 1 per cent on Friday (Jan 26), boosted by upbeat quarterly updates from luxury group LVMH and spirits maker Remy Cointreau, while investors assessed interest rate cut prospects following the European Central Bank’s latest policy decision.
The pan-European Stoxx 600 index ended 1.1 per cent higher, hitting its highest level in two years and clocking a weekly advance of 3.1 per cent.
LVMH jumped 12.8 per cent after the world’s largest luxury group posted a 10 per cent rise in fourth-quarter sales, driven by resilient demand, including from Chinese buyers.
The stock led sectoral advances, helping the personal and household goods index add 5.2 per cent.
A gauge of the top 10 European luxury stocks gained 6.7 per cent, while investors added some US$70 billion to the market value of top luxury shares on Friday.
“The shares are up in relief because there’s been so much negative commentary... referring to a bit of a slowdown,” said Russ Mould, investment director at AJ Bell.
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“One of the core (components) of luxury goods stocks is the plutocratic customer base, that will be relatively insensitive to what goes on in the wider economy.”
Remy Cointreau advanced 15.2 per cent after the French spirits maker posted a slightly smaller-than-expected decline in third-quarter sales. Rivals Pernod Ricard and Diageo also added 7.9 per cent and 5.1 per cent, respectively.
France’s CAC 40 index, which houses both stocks, rallied 2.3 per cent and outperformed other regional bourses.
Heavyweight healthcare stocks added 1.3 per cent, lifted by a 14.4 per cent rise in Lonza after the Swiss contract drug manufacturer reported sales and core earnings beats for 2023.
The ECB held interest rates at 4 per cent on Thursday and reaffirmed its commitment to fighting inflation even as the time to start easing borrowing costs approaches.
A slew of strong earnings from European companies this week and a slight dovish tilt in the ECB’s commentary helped the benchmark index notch its best weekly performance in 12 weeks.
Taking cues from the central bank’s stress on progress in tackling inflation, money market traders are now pricing in nearly 141 basis points of rate cuts this year, up from around 130 bps a day earlier.
On Friday’s data front, German consumer sentiment is set to tumble in February as households continue to brace for uncertainty, while Spain’s unemployment rate unexpectedly dipped in the fourth quarter to end the year at its lowest since 2007.
In the United States, data showed prices rose marginally in December, keeping the annual increase in inflation below 3 per cent for a third straight month. REUTERS
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