PARIS: European shares snapped a six-day winning run on Wednesday, hurt by underwhelming results from French luxury goods giant LVMH as well as nerves ahead of the Federal Reserve’s interest rate decision later in the day.
The pan-European STOXX 600 index shed 0.5% after recording its longest winning streak since January on Tuesday.
Shares of LVMH fell 5.2% in its biggest one-day percentage loss in nearly 17 months, as an in-line increase in sales at the world’s top luxury firm indicated the overall sector was moving towards a less impressive path of growth.
Rivals Kering and Hermes dropped 1.8% and 2.4%, respectively, dragging France’s luxury-heavy CAC 40 down 1.4%.
Christian Dior also lost 4.0%.
“What we are seeing is shares such as LVMH very much confirming fears that the strength of consumer demand is waning,” said Stuart Cole, chief macro economist at Equiti Capital.
“This waning consumption and the associated weakening in economic growth that is expected to accompany it, is coming at time when the ECB - alongside the Fed and BoE (Bank of England) - are still expected to hike interest rates further,” Cole added.
Investors will now focus on the Fed, which is widely expected to raise interest rates by a quarter of a percentage point at 1800 GMT, possibly its last move in its current aggressive monetary tightening cycle.
The European Central Bank is seen hiking rates by 25 basis points to the 3.5%-3.75% range on Thursday, with recent weak economic data dampening expectations of another hike in September.
Meanwhile, Microsoft’s results signalling how the high-stakes battle for AI supremacy will cost the tech giants dampnened investor sentiment further.
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