EUROPE MARKETS: European Stocks End In The Red, Led By Pullback In Energy Shares

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10/11/2016 | 06:06 pm

By Carla Mozee, MarketWatch

Euro falls below $1.11

European stocks ended in the red Tuesday, but luxury shares were solidly higher on an earnings report from LVMH MoŽt Hennessy Louis Vuitton SE.

The Stoxx Europe 600 ended down by 0.5% at 340.17, the fourth loss in five sessions. All but the consumer goods sector slumped.

Oil: Oil shares lost the most ground Tuesday, with oil prices falling further after the International Energy Agency said OPEC boosted its output to a record 33.64 million barrels a day in September.

Among oil producers, Norway's Statoil ASA (>> Statoil ASA) and Italy's Eni SpA (>> Eni SpA) each lost 1.9% but Portugal's Galp Energia SGPS (>> Galp Energia) held to a 1.2% rise. French oil-field-services provider Technip SA (>> Technip) ended down 1.7%.

On Monday, crude-oil futures leapt to their highest in more than a year after Russian President Vladimir Putin and Saudi Arabia's energy minister made upbeat comments on the possibility of an oil production deal.

Luxury lights up: France's LVMH MoŽt Hennessy Louis Vuitton SE (LVMUY) jumped by the most since late July. They leapt 4.5% as the high-end fashion and accessories house said strength in its Asia business contributed to a rise in nine-month revenue .

LVMH's results "are a reassuring read-across for soft luxury in the short term," wrote Liberum analyst Tom Gadsby, with "soft luxury" a reference to the fashion and clothing end of the market.

"We recognize the strength of LVMH's stable of brands. Leading positions across multiple sectors can shelter the company from the worst of demand volatility," he added.

Other luxury stocks enjoyed gains. Christian Dior SE (>> Christian Dior) seized a 4.9% advance, Swatch Group Ltd. (>> The Swatch Group SA) picked up 4.5% and Cartier's parent Cie. FinanciŤre Richemont S.A. (>> Compagnie Financiere Richemont SA) rose 4%.

Hugo Boss AG (>> Hugo Boss AG) added 2.9% and Britain's Burberry Group PLC (>> Burberry Group plc) ended up 2.5%.

Currency watch: The pound's slide to three-decade lows has now made Britain the cheapest place in the world to purchase luxury goods , analysts have said. The pound tumbled to $1.2200 on Tuesday , still dogged by worries that the U.K. will be formally locked out of European Union's single market when it finally leaves the bloc.

Meanwhile, the euro fell to $1.1057 from $1.1147 late Monday.

"More weakness in GBP/USD is clearly starting to spillover into the euro's realm, as markets brace for a period of tumult and uncertainty once the Brexit negotiations start," said Christopher Vecchio, currency analyst at DailyFX, in a note.

"Concurrently, with five major elections in core European countries next year, the possibility for political discontent to manifest itself in the ballot booth is high. No doubt, this is an existential threat simmering below the surface of the Brexit negotiations for the European Union," he said.

Indexes: France's CAC 40 fell 0.6% to 4,471.74, and Germany's DAX 30 closed down 0.4% to 10,577.16. Italy's FTSE MIB dropped 1% to 16,474.06.

The U.K's FTSE 100 fell 0.4% to 7,070.88, but notched its highest intraday level.

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