FRANKFURT: European stocks closed higher on Wednesday as France’s LVMH sparked a rally in luxury goods groups and eased concerns that slowing global growth and tariffs are hurting corporate health.
LVMH shares rose 12.2 percent, their biggest one-day jump since January, after the owner of Louis Vuitton and Dior reported better-than-expected third quarter sales, driven by improved demand in China.
“We think the results are really positive for the sector and probably the peak bearishness is behind us,” said Benedicte Lowe, equity derivatives strategist at BNP Paribas.
LVMH is considered a bellwether for the luxury sector, which has undergone a prolonged slump since the winding down of the post-pandemic boom.
Other luxury stocks such as Hermes, Kering , Richemont and Moncler rose by between 4.7 percent and 7.8 percent. The rally is expected to have added some USD80 billion to the market capitalisation of the top 10 firms in the STOXX Europe Luxury index, Reuters calculated.
The luxury-heavy French blue-chip index rose 2 percent, while the Europe-wide STOXX 600 index was 0.7 percent higher.
Among other companies reporting, ASML shares added 3.1 percent after the world’s biggest supplier of computer chip-making equipment beat market expectations for third-quarter orders and fourth-quarter forecasts.
TotalEnergies climbed 3.7 percent after the French oil major said it expects to report an increase in third-quarter results as higher upstream production and improving crude refining margins offset lower oil prices.
Third-quarter earnings estimates for STOXX companies have improved in recent weeks, with analysts forecasting a 0.5 percent rise in profit growth on average, LSEG IBES data shows, compared with a 0.6 percent drop seen at the start of the earnings season.
This is still a sharp deterioration from the 7.8 percent growth seen in the third quarter of 2024.
BNP Paribas’ Lowe said the European blue-chip results indicate “the worst point” in the earnings cycle might have passed and investors could focus on “the upside story”.
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