European Markets Faced Headwinds After LVMH Sales Dropped, UK Inflation Eased

Bridgette Randall
16 Oct, 2024
London

European markets traded down ahead of the rate decisions from the European Central Bank, and weak results from two leading companies compounded market anxieties. 

Benchmark indexes in London, Paris, and Frankfurt traded down ahead of the interest rate decisions from the European Central Bank on Thursday. 

The European Central Bank is widely expected to cut rates for the third time this year amid deteriorating economic conditions and a weakening inflation outlook. 

Inflation in the eurozone peaked at 10.6% in October 2022 and has steadily declined to an annual 1.7% in September, below the central bank's targe rate of 2%. 

This decline in overall inflation is primarily driven by the fall in energy prices, but core inflation, which excludes food and energy prices, remained at 2.7% and service inflation stayed at 4%. 

Separately, the UK's overall inflation decreased to 1.7% in September, the lowest since April 2021, after staying at 2.2% in the previous two months, the Office for National Statistics reported Wednesday. 

The core rate of inflation, which excludes food and energy prices, decreased to an annual rate of 3.2% in September from 3.6% in the previous month. 

Core inflation dropped to the lowest level since September 2021. 

 

Europe Indexes and Yields

The DAX index decreased by 0.3% to 19,434.40; the CAC-40 index fell by 0.6% to 7,477.82; and the FTSE 100 index rose by 0.6% to 8,298.30. 

The yield on 10-year German bonds edged lower to 2.19%, French bonds inched lower to 2.93%, the UK gilts edged down to 4.09%, and Italian bonds decreased to 3.42%.

The euro edged lower to $1.08; the British pound inched higher to $1.29; and the U.S. dollar strengthened to 86.23 Swiss cents.

Brent crude decreased $0.39 to $73.85 a barrel, and the Dutch TTF natural gas fell by €0.25 to €39.80 per MWh. 

 

Europe Stock Movers

LVMH declined 3.7% to €601.20 after the fashion and leather goods company reported a drop in third quarter sales and warned of an "uncertain" outlook. 

Overall sales declined 2% to €60.7 billion from €62.2 billion, driven by a 11% fall in wine & spirit sales to €4.2 billion, fashion & leather goods sales by 3% to €29.9 billion, and watches & jewelry sales by 5% to €7.5 billion. 

However, perfumes and cosmetic sales increased 2% to €6.1 billion. 

The luxury goods company blamed the sales weakness to challenges in China following "several years of exceptional post-Covid growth."

Other luxury goods makers declined following the LVMH announcement: Kering SA fell 2%, Hermes International declined 1.3%, L'Oreal dropped 2%, and Brunello Cucinelli S.p.A. eased 0.8%. 

ASML Holding declined 2.5% to €651.0 after dropping as much as 15% in the previous session following the company's sales warning. 

Rexel SA dropped 3.9% to €25.28, and the French distributor of electric supplies cut its 2024 outlook, citing challenging market conditions in Europe. 

Stellantis NV declined 1.3% to €11.87 after the Italy-based vehicle maker reported a 20% decline in shipment in the third quarter. 

Just Eat Takeaway.com declined 2.9% to €12.0, and the food delivery company reported a decline in orders in the third quarter. 

Hammerson plc rose 3.5% to 320.20 pence after the property developer launched a £140 million stock repurchase plan. 

Antofagasta jumped 2.8% to 1,847.0 pence after the Chile-based mining company reported a 15% increase in copper production.