Shares in European companies rose to a two-year high on Friday, but the reasons are very different from those that led to the impressive gains on the New York Stock Exchange, Reuters and Yahoo Finance reported.
By mid-day, the pan-European STOXX 600 index, which includes 600 companies listed on European stock exchanges, was up 0.9 percent after shares in luxury goods giant LVMH rose 9.8 percent. Shares in LVMH rose sharply after the publication of financial results for the last quarter of last year, which showed a 10% increase in sales.
Thus, the STOXX 600, the largest stock index in European financial markets, reached its highest level in the last two years, although its increase on Friday was modest.
The STXLUXP index, which includes shares of Europe’s 10 largest luxury goods companies, also rose 3.8% to hit its highest level since November 2022.
“Stocks rose with relief because there was so much negative commentary (…) about a slight slowdown [economică]Russ Mold, AJ Bell’s chief investment officer, told Reuters.
“One of the key components of luxury stocks is a plutocratic customer base that will be relatively insensitive to what happens in the broader economy,” it added.
Spirits maker Remy Cointreau also got off to a strong start to the day, with its share price rising 13.1% after the French company released data showing that the drop in sales in the third quarter of 2023 was smaller than analysts had expected.
Both companies are included in the CAC 40 index of the French stock exchange, which rose 1.9% and exceeded the returns recorded in other European financial markets.
The latest signal from the ECB also gave a boost to European stock markets
The SXDP index, which specializes in pharmaceutical companies and healthcare providers, also rose 1.5%, thanks to a 13.6% gain in Swiss company Lonza. Lonza reported sales and earnings that topped 2023 estimates.
European investors’ optimism was also boosted by the European Central Bank’s decision on Thursday to keep key interest rates at 4% to fight inflation, even as the time to cut them is fast approaching.
Based on the guidance provided by the ECB, brokers now estimate that benchmark interest rates in the eurozone will be cut by 140 basis points, down from the 130 basis points that most forecasts were calling for just a day ago.
Overall, the STOXX 600 is likely to end the week with its best performance in two months thanks to signals from the ECB and a number of better-than-expected financial results from European companies.
But this near-universal rise in European stock markets is by no means a contagion to the US stock market, which had a record 2023 and an equally strong start to the year amid impressive gains in tech stocks. companies.
IBM’s stock price soared to a 10-year high on Thursday, while Nvidia, the world’s largest graphics processing unit (GPU) maker, surpassed the $1.5 trillion market capitalization mark for the first time.
Impressive returns on the New York Stock Exchange are largely due to huge enthusiasm for the development of artificial intelligence technology, while in Europe the rise in prices in financial markets is fueled by companies in less “high-tech” sectors of activity.
Source: Hot News
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.