Luxury shares boost Europe’s Stoxx 600, French stocks hit 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.

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 macroeconomist at Equiti Capital.

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“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.”

DUBLIN

Bank shares on the Irish bourse had a mixed day with AIB down marginally and Bank of Ireland up 1.5 per cent at €9.49. Homebuilder Cairn Homes rose 1.4 per cent as new figures show the Government’s First Home shared equity scheme has generated big interest from first-time buyers.

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Ires Reit was also up by nearly 2.8 per cent following a strong session on Wednesday. Earlier this week a shareholder in the State’s largest private residential landlord said it plans to vote against the re-election of the company’s chairman at its upcoming annual general meeting (agm), saying its pleas to explore a sale of the “undervalued” company have been ignored. Paddy Power Betfair owner Flutter continued on an upward march, rising 1.6 per cent to €171.10 on the back of more positive sentiment around inflation and consumer spending.

EUROPE

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 businesses 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.

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.

LONDON

The UK’s FTSE 100 closed modestly up on Thursday, clocking gains for the fifth straight day in a winning streak helped by healthcare and mining stocks, while data showed the domestic economy stagnated in February.

Data from the Office for National Statistics (ONS) showed the economy failed to grow as expected in February but a bounce in January was stronger than previously thought. Bank of England chief economist Huw Pill called the data “somewhat disappointing”.

Earlier this week, the International Monetary Fund said it now expects Britain’s economy to suffer a smaller-than-expected shrinkage this year.

Adding to gains was HSBC’s upgrade on UK homebuilders including Taylor Wimpey and Barratt Development.

Bucking the trend, Imperial Brands fell 1.1 per cent and hit a six-month low after the tobacco group said its revenue for the first half of the year would be “slightly below” figures from a year earlier. The food and beverage sector, which houses Imperial Brands stock, was down 0.5 per cent.

Among other movers, Tesco added 0.6 per cent after Britain’s biggest retailer reported its full-year adjusted operating profit in line with its guidance.

NEW YORK

US stock indexes rose on Thursday as moderation in producer price inflation and a jump in weekly jobless claims brought relief to investors worried about how far the Federal Reserve will increase interest rates to tame surging prices.

Data show that the number of Americans filing new claims for unemployment benefits increased more than expected last week, a further sign that labour market conditions were loosening up.

“We’ve got onto the top of the mountain of inflation and looks like we’re coming down the other side,” said David Russell, vice-president of market intelligence at TradeStation. US Treasury yields fell, boosting rate-sensitive technology and other growth stocks. Apple, Amazon and Microsoft rose between 1.3 per cent and 3 per cent, helping the Nasdaq outperform the other Wall Street indexes.

Big US banks JPMorgan Chase, Citigroup and Wells Fargo are scheduled to report quarterly results on Friday, and investors will watch them closely for details about the sector’s overall health.

Delta Air Lines shares fell 1.5 per cent as the company missed first-quarter profit estimates.

Harley-Davidson was down 4 per cent after the motorcycle maker said chief financial officer Gina Goetter was leaving the company at the end of April. — Additional reporting Reuters