Luxury items teams drive European shares to highest degree in a month | USAEMALL.com

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

European stocks rose to hit their highest level in a month on Thursday as heavyweight luxury companies were boosted by buoyant sales from Swiss group Richemont.

The broad-based Stoxx 600 index rose 0.7 per cent to its highest point since mid-December. Paris’s Cac 40 rose 2 per cent, while Germany’s Dax rose 0.3 per cent to a fresh all-time high.

Richemont, owner of the Cartier brand, surged 17 per cent after its quarterly sales beat analysts’ expectations, in an upbeat sign for the European high-end luxury sector, whose profits have been hit by the slow Chinese economy.

The strong results triggered gains in other luxury names as “investors took Richemont’s update as a signal that the luxury goods sector’s slump was over”, said Russ Mould, an analyst at AJ Bell.

A basket of European luxury groups rose 7 per cent, with LVMH and Hermès jumping 8.9 per cent and 5.7 per cent respectively.

European stocks followed Wall Street’s gains in the previous session, as investors also welcomed strong bank earnings and inflation data showing underlying price pressures in the world’s largest economy were cooling.

US 10-year Treasury yields — a benchmark for global borrowing costs — rose 0.03 percentage points to 4.68 per cent, having fallen sharply in the previous session following the softer inflation data.

The sharp fall on Wednesday interrupted the rise this year in US government debt yields and boosted traders’ hopes that the Federal Reserve would cut interest rates earlier than expected.

“On top of stable bond yields, you have earnings from European bellwethers that are very strong, and this combination is pushing up the market,” said Emmanuel Cau, an analyst at Barclays. “Investors are relieved now.”

European chipmakers also gained after Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, forecast that overall revenue would increase by close to 25 per cent this year, although it cut its profitability target.

The Stoxx Europe 600 Technology index, which includes big European chipmakers, rose 2 per cent, while Dutch semiconductor equipment maker company ASML gained 3.4 per cent.