European Markets Extend Weekly Gains to 4%, LVMH Acquired 1.6% Stake In Moncler

Bridgette Randall
27 Sep, 2024
London

Stock market indexes in Europe advanced in Friday's trading following the faster-than-expected cooling of inflation in France and Spain. 

Benchmark indexes in Frankfurt, Paris, and London gained, and market sentiment was boosted after Chinese leaders pledged for additional large fiscal stimulus measures. 

On Friday, China's leaders pledged to provide additional fiscal stimulus during an emergency meeting chaired by President Xi Jinping. 

The meeting followed wide-ranging monetary stimulus measures announced by the People's Bank of China on Tuesday. 

Sources in Beijing also confirmed that China is preparing to inject an additional one trillion yen into the state-controlled banks over the next three weeks, supporting lending to corporations. 

The central bank today cut the 50 basis points reserve ratio for commercial banks, following the announcement on Tuesday. 

The latest cut in reserves ratio is expected to release an additional one trillion yuan for loans by commercial banks. 

 

Inflation in France and Spain Cooled in August 

Closer to home, inflation in Spain and France fell more than expected in September, supporting the case for the European Central Bank to lower its policy lending rate at the next meeting. 

Consumer price inflation in France slowed to 1.2% in September from 1.8% in August, the statistical agency, INSEE, reported today.

France's inflation fell sharply after energy price deflation was 3.3% compared to an inflation of 11.9% a year ago and 0.4% in the previous month. 

Goods prices declined at a faster pace of 0.3% from 0.1% in the previous month and fell from an inflation rate of 2.8% from a year ago. 

Consumer price inflation in Spain eased to 1.5% in September from 2.3% in August, the statistical agency, INE, reported Friday. 

Core inflation, which excludes food and energy prices, slowed to 2.4% from 2.7% in the previous month. 

On a monthly basis, overall consumer price inflation was -0.6% and core inflation was -0.4%. 

In other economic news in the region, Germany's seasonally adjusted jobless rate held steady for the fourth month in a row at 6.0%. 

The number of jobless people increased from 17,000 to 2.823 million, and job openings fell from 65,000 to 696,000. 

 

Europe Indexes and Yields

The DAX index increased by 1.1% to 19,129.17; the CAC-40 index rose by 1.5% to 7,677.44; and the FTSE 100 index rose by 0.2% to 8,285.97. 

The yield on 10-year German bonds edged higher to 2.15%, French bonds inched lower to 2.94%, the UK gilts edged up to 4.0%, and Italian bonds decreased to 3.46%.

The euro edged lower to $1.11; the British pound inched higher to $1.33; and the U.S. dollar weakened to 84.38 Swiss cents.

Brent crude decreased $0.12 to $71.70 a barrel, and the Dutch TTF natural gas fell by €0.33 to €38.03 per MWh. 

 

Europe Stock Movers

China-linked vehicle makers and luxury goods companies traded higher for the fourth day in a row amid rising hopes of additional fiscal stimulus. 

Mercedes-Benz Group AG increased 2.9% to €59.42, Volkswagen Group advanced 2.2% to €97.44, and BMW gained 2.9% to €80.80. 

LVMH increased 1.2% to €687.20, Hermes International added 1.1% to €2,230.40, Kering SA advanced 3.8% to €260.35, Prada SpA jumped 6.8%, and Richemont traded up 1.1% to CHF 132.65. 

Moncler SpA jumped 8.9% to €56.72 after LVMH agreed to acquire a 1.6% stake in the company. 

LVMH acquired a 10% stake in the holding company, Double R, owned by chief executive Remo Rufini, that controls a 15.8% stake in the publicly traded company. 

LVMH can increase its stake in the investment vehicle that controls Moncler, Double R, to as much as 22%. 

With the LVMH's investment, Double R plans to increase its holding in Moncler to 18.5% from 15.8%. 

LVMH will have one board seat on Moncler and two on Double R.