Europe Movers: Burberry, Mercedes-Benz Group, Luxury Stocks

Inga Muller
20 Sep, 2024
Frankfurt

European markets trimmed weekly gains after luxury goods and vehicle makers with significant exposure to China led the decliners. 

Germany's producer price inflation extended its yearlong decline in August, and the UK's retail sales accelerated after warmer weather boosted demand for food and apparel. 

The DAX index decreased by 0.8% to 18,850.71; the CAC-40 index fell by 0.7% to 7,565.09; and the FTSE 100 index declined by 0.4% to 8,294.19. 

The yield on 10-year German bonds edged higher to 2.20%, French bonds inched higher to 2.93%, the UK gilts edged up to 3.89%, and Italian bonds increased to 3.55%.

Vehicle makers were among the leading decliners in Friday's trading after Mercedes-Benz lowered its annual outlook following a rapid deterioration in its business in China. 

Mercedes-Benz Group dropped 6.4% to €55.24, and the luxury automaker said it plans to invest over $2 billion in China with local partners and accelerate its transition to electric vehicle manufacturing. 

The company said its adjusted operating earnings before interest and tax were "significantly below" last year's level amid a rapid decline in sales in China. 

The company-added return on sales is likely to fall in the range between 7.5% and 8.5% from the previously estimated range between 10% and 11%. 

Following the Mercedes-Benz announcement, stocks of other leading automakers declined in the region. 

Porsche Automobil decreased 2.6% to €39.90, Volvo declined 1.5% to SEK 260.60, Stellantis fell 2.4% to €13.63, BMW dropped 3% to €73.86, and Volkswagen eased 2.4% to €91.62. 

Luxury goods makers were also on the slide on the worry of their exposure to China. 

Hermes International declined 2.8% to €1,937.0, LVMH fell 2.8% to €597.40, and Kering SA, the parent of Gucci, decreased 3.5% to €224.95. 

Burberry Group declined 4.8% to 596.60 pence after Goldman Sachs lowered its target price to €235 from €270 and assigned a "neutral" rating. 

Among other widely held stocks, Deutsche Post, Infineon, Puma, Adidas, Essilor, and L'Oreal fell between 2% and 3% amid market weakness.