European Markets Advance, Louis Vuitton and Remy Cointreau Boost Luxury Peers

Bridgette Randall
26 Jan, 2024
Frankfurt

European markets advanced and bond yields declined in Friday's trading as investors digested the European Central Bank's stance on inflation.

Benchmark indexes in Paris and London advanced but struggled in Frankfurt after German consumer morale unexpectedly fell.

The CAC-40 index soared more than 2% after Louis Vuitton and Remy Cointreau reported strong financial results. 

On Thursday, the European Central Bank left its key lending rates unrevised and signaled that interest rates will remain restrictive as long as necessary, without giving any clarity if and when rates may be cut.

Moreover, investors also reviewed the faster-than-expected economic growth in the U.S. in the fourth quarter while inflation slowed.

Investors are also looking ahead to the release of the personal consumption expenditure price index, an alternative measure of inflation preferred by policymakers.

On the earnings front, investors are looking forward to results from Volvo, Lonza Group, KONE, 3i Group, Sartorius Stedim, Telia Company, and HEXPOL.

 

Europe Indexes and Yields

The DAX index decreased 0.04% to 16,896.12, the CAC-40 index rose 1.7% to 7,588.71, and the FTSE 100 index inched higher by 1.1% to 7,612.82.

The yield on 10-year German bonds edged down to 2.26%; French bonds inched lower to 2.74%; the UK gilts edged lower to 3.95%; and Italian bonds inched lower to 3.77%.

The euro edged lower to $1.084, the British pound inched higher to $1.272, and the U.S. dollar gained to 86.46 Swiss cents.

Brent crude decreased $0.41 to $82.02 a barrel, and the Dutch TTF natural gas decreased by €0.72 to €27.06 per MWh.

 

Europe Stock Movers

Volvo AB declined 1.1% to SEK 248.25 after the company reported mixed quarterly results.

Net sales in the fourth quarter increased by 10% to SEK 148.1 billion from SEK 134.3 billion and rose by 8% in constant currency.

Adjusted operating income increased to SEK 18,384 million from SEK 12,171 million, indicating an adjusted operating margin of 12.4% compared to 9.1%.

Adjusted operating income excludes the negative effects of SEK 1,490 million.

Earnings per share increased to SEK 5.93 from SEK 3.26 a year ago.

"The Board of Directors proposes an ordinary dividend of SEK 7.50 per share and an extra dividend of SEK 10.50 per share,” said Martin Lundstedt, President and CEO, in an update to investors.

Lonza Group soared 13% to CHF 420.0 after the Swiss pharmaceutical group reported better-than-expected earnings and revenues.

2023 sales increased 8% to 6.72 billion Swiss francs from 6.22 billion Swiss francs and rose 10.9% at constant currency rates.

Biologics division sales rose 13.6% to 3.7 billion francs, small molecule division sales rose 10% to 901 million francs, cell and gene division sales edged up 0.4% to 696 million francs, but capsules and health ingredients division sales dropped 8.3% to 1.2 billion francs.

Fiscal 2023 operating earnings, or EBITDA, fell 9.3% to 1.94 billion francs from 2.14 billion francs a year ago, and the EBITDA margin declined to 28.9% from 34.4% a year ago.

Core EBITDA increased 0.2% from the previous year to 2 billion francs, resulting in a margin of 29.8%, down from 32.1% a year ago.

The company estimated flat sales in constant currencies and core EBITDA margins in the "high twenties."

The company proposed a 14% increase in dividends to 4.0 francs from 3.50 francs a year ago.

KONE oyj increased 3.2% to €46.18 after the Finnish elevator group reported better-than-expected results.

Sales in the fourth quarter declined by 3.5% to €2,809.9 from €2,911.5 million and rose 0.7% on comparable exchange rates.

Net income was flat at €276.3 million, and basic earnings per share were flat at 53 cents.

Orders received increased by 5.4% to €2,049.2 from €1,944.2 million a year ago. On comparable exchange rates, orders rose by 10.5%.

Sales in 2023 increased 0.4% to €10.95 billion from €10.90 billion, net income increased 18.8% to €931.6 million from €784.5 million, and basic earnings per share rose 15% to €1.79 from €1.50 a year ago.

"KONE expects its sales to be stable or to grow slightly at comparable exchange rates in 2024. The improvement in adjusted EBIT margin is expected to continue in 2024, albeit with fewer tailwinds than in 2023," the company noted in an update to investors released Friday.