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28 Sep, Thursday
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Bull Trader USA

Europe Markets: Handbag wars? Chanel price hikes rally luxury goods makers in Europe

European stocks perked up further on Friday, benefiting from gains in luxury goods makers and travel-related companies and gains in U.S. stocks after better-than-expected jobs data.

The Stoxx Europe 600

rose 0.3% to 484.55, poised for its fifth-straight fresh record close, after banging out new highs all week. The index closed at 483.21 on Thursday. For the week, the Stoxx 600 is up 1.9%, which will be the fifth-straight weekly win in a row.

Of the major regional indexes, the German DAX

gained 0.3%, the French CAC 40

jumped 0.9% and the U.K. FTSE 100

increased 0.4%. The euro

and pound

were both lower against a stronger U.S. dollar
The pound also continued to lose ground after surprise inaction by the Bank of England on Thursday.

Read: Pound falls near September lows as Bank of England surprise continues to reverberate

Fresh data showed German industrial production fell in September for the second straight month as supply-chain bottlenecks weighed on factory output.

Among stocks on the move, drugmakers were lower, with shares of AstraZeneca PLC


fell 1.9% and Roche

fell 1.3%. Novo Nordisk


shares fell 3%.

Read: Pfizer shares soar after data finds COVID antiviral reduced risk of death or hospitalization by 89% in high-risk adults

France’s CAC 40 was lifted by a 3% gain for shares of luxury goods maker Kering

and 2.5% gain for rival LVMH Moët Hennessy Louis Vuitton
The rest of the sector was also up, with Hermès International

shares up 2%, Christian Dior

stock up 2%.

Piral Dadhania, analyst at RBC Capital, said luxury goods companies have benefited this week from  +10% -15% price hikes on two of privately-owned Chanel’s iconic women’s handbags. The sector has also held up well in the third quarter and through October, despite tougher comparisons, China COVID disruption and a moderating economic environment, to name a few, the analyst said.

“The broader luxury sector should benefit from Chanel’s most recent price increases, as it creates some headroom in the coming months/quarters, even if we do not expect most brands to take as aggressive an approach,” said the analyst, who noted that Louis Vuitton hiked prices 6% in October for 1/3 of its handbag SKU mix, a brand that has benefited, according to a management’s third-quarter earnings call.

The banking sector was higher, led by HSBC

which was up over 1%.

Also climbing was the travel sector, after well-received results from International Consolidated Airlines
with those shares up 2.5%. The company reported positive operating cash flow for the first time since the start of the pandemic.

Gains spread across the sector, with cruise group Carnival


up 7%, travel group TUI

rose over 5%, while airlines Deutsche Lufthansa

gained 5% and Ryanair


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