STOXX 600 recovers some ground as LVMH delights investors
European stocks are trading higher on Wednesday after a strong performance from LVMH improved sentiment in the region
Europe’s in the green this morning, led by the luxury sector after a blowout update from LVMH lifted the CAC 40 and the STOXX 600, helping sentiment across the region. LVMH’s Q3 showed a return to modest organic growth with sales around €18.3bn, beating expectations and triggering a 14% jump in the shares that lifted the wider luxury sector.
Divisionally, Fashion & Leather Goods was still slightly negative (-2% y/y) but much improved from last quarter’s -9%, while Selective Retailing (Sephora) remained the standout at roughly +7%. Regionally, Mainland China grew about 7% and the U.S. around 3%, offsetting a 2% dip in Europe on softer tourist spend. Management’s tone was cautiously optimistic into Q4 amid macro uncertainty and FX headwinds; the key watchouts are a turn to growth in the fashion sector, the durability of China’s recovery, and currency pressure through year-end.
LVMH daily chart
Past performance is not a reliable indicator of future results.
As a result, the STOXX 600 is attempting to stage another recovery from the increasing downside pressure that has emerged over the past week. Renewed tariff concerns after the spat between China and the US have weighed on sentiment across global equities but investors remain cautiously hopeful that the situation will de-escalate before the 100% tariff is applied at the end of the month. Domestically, improved sentiment around France’s political situation has enable some of the risk premium to be removed from the stock market.
However, sentiment remains fragile, with ample sellers ready and waiting to catch the next bounce, likely if resistance re-emerges around 570-575. The guidance remains modestly higher, but the outlook has dampened in recent weeks. The RSI is back within a normal range after Friday’s selloff with further space to go in the upside, whilst the moving averages remain anchored below the price, likely ready to act as near-term support levels.
STOXX 600 daily chart
Past performance is not a reliable indicator of future results.