The euro area’s blue-chip index is finally set for its highest close since the global financial crisis.
(Bloomberg) — The euro area’s blue-chip index is finally set for its highest close since the global financial crisis.
The Euro Stoxx 50 gained as much as 0.3% on Monday, putting it on track to close at its highest level since December 2007, before trading little changed by 8:56 a.m. in London. TotalEnergies SE, Airbus SE and Prosus NV outperformed today.
The gauge got a lift last week as luxury stocks rallied amid upbeat sales reports from Hermes International and LVMH on a boost from China’s reopening. LVMH’s gains last week briefly ranked it as the world’s 10th-biggest company. Luxury shares were lower on Monday.
James Athey, investment director at Abrdn, said the outlook for luxury stocks continues to be positive even amid signs of slowing growth, given their “acyclical” nature and accumulated consumer savings. The sector is defensive “simply because the wealthy are much less sensitive to changes in economic conditions,” he said.
While European stocks have rallied this year following a slump in 2022 on inflation worries, it’s taken the Euro Stoxx 50 far longer than its peers to reclaim these levels, partly due to its exposure to the banking sector, which saw several years of underperformance against the backdrop of negative interest rates. The pan-European Stoxx 600 has hit new record highs since the global financial crisis, whereas the blue-chip index last hit a record in 2000.
“After the European debt crisis and the housing crisis, European banks had to de-lever their balance sheets by a large amount,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “That meant they had to curtail lending for a long time and more aggressively than their US counterparts and that’s why they went nowhere for the better part of a decade.”
This year, the Euro Stoxx 50 is outperforming the Stoxx 600 by far with banking stocks resuming a rally following brief turmoil in March. In terms of points, LVMH, ASML Holding NV, L’Oreal SA, SAP SE and Hermes have been the biggest gainers in the index, which is up 16% this year, compared with a 10% rise for the Stoxx 600.
(An earlier version of the story corrected reference to luxury stocks’ move today)
(Updates with biggest movers in second paragraph)
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