Europe: Luxury shares boost Stoxx 600, French stocks hit new record high

EUROPEAN shares climbed on Thursday on a boost from luxury stocks after LVMH posted upbeat first-quarter sales, while hopes of a pause in the Federal Reserve’s rate hikes after signs of cooling US inflation also aided sentiment.

The pan-European Stoxx 600 rose 0.4 per cent, while the blue-chip index gained 0.5 per cent, inching closer to its highest level in 22 years hit on Wednesday.

LVMH climbed 5.7 per cent, closing at a record high after the world’s largest luxury company reported a 17 per cent jump in first-quarter sales that breezed past estimates as business in China rebounded sharply.

Shares of China-exposed peer Hermes also touched a record high, jumping 3.2 per cent, while other luxury firms Richemont and Kering also rose 4.4 per cent and 2.7 per cent respectively.

France’s luxury-heavy CAC 40 hit a record high for the third consecutive session, closing up 1.2 per cent, while Copenhagen’s OMX 20 also hit an all-time high.

European stocks have more than recouped last month’s declines with gains of 1.4 per cent so far, outperforming the benchmark S&P 500 index on Wall Street, amid ebbing fears of a steep recession in the euro zone.

“European stocks are seen as undervalued compared to their US peers. With the economic outlook for the US deteriorating, investors appear happier now to take advantage of this pricing skew and buy relatively cheaper European shares,” said Stuart Cole, head macro economist at Equiti Capital.

“The risk factor that had been associated with holding European shares is diminishing and this is allowing investment decisions to be made based more on fair value plays.”

Euro zone industrial output was stronger than expected in February, data showed on Thursday.

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US: Stocks rally, while dollar drops after latest inflation data

Recent US data, including softer consumer and producer prices reports, have fuelled hopes that the Federal Reserve could go easy on future interest rate hikes.

European Central Bank policymakers are converging on a 25 basis point interest rate hike in May, five sources with direct knowledge of the discussion told Reuters.

Healthcare stocks were also a big boost to the Stoxx 600, thanks to 1.1 per cent gains in shares of Novo Nordisk, which hit an all-time peak after the drugmaker raised its full-year results forecast.

Britain’s biggest retailer Tesco rose 0.6 per cent on forecasting flat profit in its new financial year, stemming the 6.3 per cent decline from 2022/23.

UK’s FTSE 100 reversed early declines to end up 0.3 per cent. Data showed Britain’s economy failed to grow as expected in February, as strikes by public workers hit output.

Limiting the Stoxx 600’s gains, shares of Italy’s biggest utility Enel dropped 3.8 per cent, after the country’s Treasury appointed Flavio Cattaneo as its CEO. REUTERS