EUROPEAN EQUITY UPDATE: LVMH sales bolsters the European luxury sector

Analysis details (09:25)

• European equities (Eurostoxx 50 +0.5%, DAX +0.1%) are showing a somewhat mixed performance amid post-earnings distortions from luxury behemoth LVMH (+4.6%) which holds a 6.7% weighting in the Eurostoxx 50 and 12.5% weighting in the CAC 40 (+0.9%) with the latter the best performing index in the region. Q1 revenues from LVMH beat expectations (EUR 21.04bln vs. Exp. EUR 19.7bln) with strong performance in Fashion and Leather. Accompanying commentary from the Co. noted that Asia experienced a significant rebound following the lifting of health restrictions whilst Europe and Japan benefitted from robust demand from local customers and international travellers.


• In terms of macro updates for the Eurozone, Reuters ECB sources highlighted that the view on the Governing Council is converging towards a 25bps hike next month whilst one small group favours 50bps and another prefers unchanged.


• US equity futures are higher (ES +0.2%, NQ +0.3%, RTY +0.2%) following yesterday’s session of losses on Wall Street post-CPI and FOMC minutes. Currently, markets are pricing with over 70% certainty that the Fed will lift rates by 25bps at the May 3rd meeting, although around 50bps of rate cuts are priced through the end of this year, more dovish than the approximately 40bps of cuts that were being priced ahead of Wednesday's CPI release. Today's PPI and weekly initial jobless claims data will offer more insight on the growth and inflation dynamics, ahead of retail sales data out on Friday.


• Equity sectors in Europe are somewhat mixed with Consumer Products and Services a clear outlier to the upside amid aforementioned gains in LVMH which has inspired upside in the likes of Richemont (+3.5%), Hermes (+3.4%), Kering (+1.8%), Moncler (+3.5%) and Burberry (+2%). Elsewhere, UK homebuilders are on a firmer footing following broker upgrades for Barratt Developments (+2.3%), Bellway (+3.4%), Berkeley Group (+1.7%), Crest Nicholson (+1.7%), Redrow (+3.7%) and Taylor Wimpey (+2.1%) at HSBC. To the downside, Utilities lag and feature Enel (-4.2%) as the standout underperformer in the group following news that the Italian government has appointed the former Telecom Italia head Cattaneo as its new CEO. Tesco (+1.7%) shares are on the front foot post-FY results which saw the Co. note strong performance across the group and volumes holding up well. Continuing with the FTSE 100, Imperial Brands (-1.7%) lags following its H1 update in which it noted that its Russian exit will result in H1 net revenue being slightly lower YY at CC.

13 Apr 2023 - 09:25- Fixed IncomeData- Source: Newsquawk