Europe: Shares rise on Richemont earnings, energy boost

EUROPEAN shares rose on Friday (May 12) on upbeat results from luxury major Richemont and gains in energy stocks, while investors assessed inflation data from France and Spain for signals about the European Central Bank’s (ECB) plans on interest rate hikes.

The pan-European Stoxx 600 index closed the day 0.4 per cent higher.

The benchmark index has traded in a tight range in recent weeks as investors remain concerned about the possibility of a US recession and further rate hikes from the ECB.

Richemont jumped 3.5 per cent, after touching a record high in early trade, as the luxury goods group beat expectations after strong demand from Chinese consumers for jewellery and watches boosted net profit and sales in the 12 months through March.

“Luxury is doing very well because the Chinese story is more about domestic recovery, not so much manufacturing. What we’re getting out of China and the way it affects the European market is very uneven,” said Anthi Tsouvali, a multi-asset strategist at State Street Global Markets.

“Within Europe, we’re more positive on defensive sectors versus cyclicals.”

Meanwhile, data showed Spanish national consumer prices rose 4.1 per cent in the 12 months through April, while French inflation rose 6.9 per cent – both in-line with economists’ estimates.

The ECB’s latest interest rate hike won’t be the last as it needs to ensure the current wave of inflation comes to an end, said ECB policymaker Joachim Nagel.

Among other major movers, energy stocks including Shell and BP were among the top gainers tracking rising oil prices.

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Scor soared 9.4 per cent to top the Stoxx 600 after the French reinsurance company posted nearly double the first-quarter net income expected by markets.

French bank Societe Generale gained 1.2 per cent after posting better-than-expected quarterly earnings as turmoil in bond and currency markets boosted its trading business.

On the contrary, troubled Swedish real estate group SBB, whose shares have plunged recently on debt concerns, slid 8.8 per cent after selling most of its shares in construction company JM for 2.8 billion Swedish crowns (S$357.3 million).

Europe’s real estate was the worst hit sector and posted its steepest weekly decline of 4.5 per cent since late March.

So far, over 66 per cent of the Stoxx 600 companies that have reported quarterly results have beaten earnings expectations, versus the typical beat of 53 per cent, Refinitiv data showed.

British online retail platform THG slumped 15.8 per cent after ending talks with Apollo Global Management as it sees “no merit” in further discussions after rejecting the private equity firm’s buyout proposal.

Further, ratings agency Fitch is set to review Italy’s sovereign rating later in the day. REUTERS