European shares rise as Richemont leads luxury retailers higher

European shares rose on Friday as miners and luxury goods retailers jumped on news of China easing some of its strict COVID-19 rules, with Richemont's better-than-expected sales and margins also aiding the rally in luxury stocks. The STOXX 600 index advanced 0.5% by 0914 GMT, with Swiss luxury group Richemont surging 12.7% to the top of the index.


Reuters | Updated: 11-11-2022 15:22 IST | Created: 11-11-2022 15:14 IST
European shares rise as Richemont leads luxury retailers higher
Representative Image Image Credit: Pixabay

European shares rose on Friday as miners and luxury goods retailers jumped on news of China easing some of its strict COVID-19 rules, with Richemont's better-than-expected sales and margins also aiding the rally in luxury stocks.

The STOXX 600 index advanced 0.5% by 0914 GMT, with Swiss luxury group Richemont surging 12.7% to the top of the index. China-exposed luxury giants LVMH, Kering , Pernod Ricard, and Hermes International rose between 1.2% and 3.0% to boost the euro zone blue-chips index by 0.9%.

The European basic resources sector index jumped 2.0% as prices of base metals shot up after China eased some of its COVID-19 rules. The country's eased steps included shortening quarantines by two days for close contacts of infected people and for inbound travellers, and removing a penalty for airlines for bringing in too many cases.

"Markets are welcoming looser COVID rules in China, but infection numbers are elevated and vaccination rates are low, which means that the path to complete removal of restrictions still looks long," strategists at ING wrote in a client note. The STOXX 600 hovered at 11-week highs hit in the previous session when a smaller-than-expected rise in October U.S. inflation bolstered hopes of less aggressive interest rate hikes from the Federal Reserve going ahead.

Rate-sensitive parts of the market, including technology and real estate, surged 2.3% and 3.4%, respectively. A largely positive European earnings season has also helped the benchmark index stretch gains to four straight weeks, with this week's performance of a 4% rise set for its best in nearly eight months.

Still, analysts said this profit growth could dry up in Europe in a matter of months as high inflation and recession rattle the economy, potentially dragging the bear market out for even longer. Germany's inflation continued to rise at an alarming pace as data showed consumer prices, harmonised to compare with other European countries, was 11.6% higher year-on-year in October.

Among stocks, Europe's largest mobile phone tower operator, Spain's Cellnex, gained 5.6% after posting a 45% rise in nine-month core earnings. Delivery Hero jumped 10.6% as analysts raised their price targets on the German takeaway food company's shares a day after it forecast positive adjusted core profit margin for next year and reassured investors of reaching profitability.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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