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Handbag wars? Chanel price hike rallies luxury goods makers in Europe

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European stocks rallied again on Friday, benefiting from gains by luxury goods manufacturers and travel-related companies and gains by US stocks after better-than-expected employment data.

The Stoxx Europe 600 SXXP,
+ 0.05%
rose 0.3% to 484.55, ready for its fifth consecutive closing record, after hitting new highs all week. The index closed at 483.21 on Thursday. For the week, the Stoxx 600 is up 1.9%, which will be the fifth consecutive weekly win.

Among the main regional indices, the German DAX DAX,
+ 0.15%
gained 0.3%, the CAC 40 PX1,
+ 0.76%
jumped 0.9% and the UK FTSE 100 UKX,
+ 0.33%
increased by 0.4%. The euro EURUSD,
+ 0.10%
and GBPUSD pound,
-0.02%
were both less than a stronger US dollar DXY,
-0.14%.
The pound also continued to lose ground after the Bank of England’s surprise inaction on Thursday.

Read: Pound drops near September lows as Bank of England surprise continues to reverberate

New data showed that German industrial production fell in September for the second month in a row, with supply chain bottlenecks weighing on output at factories.

Among the moving stocks, drugmakers were down, with shares of AstraZeneca PLC AZN,
-1.16%

AZN,
-1.42%
fell 1.9% and Roche ROG,
-1.62%
fell 1.3%. Novo Nordisk NVO,
-2.10%

NVO,
-2.10%
stocks fell 3%.

Read: Pfizer shares skyrocket after data shows antiviral COVID reduces risk of death or hospitalization by 89% in high-risk adults

The French CAC 40 was driven by a gain of 3% for the shares of luxury goods manufacturer Kering KER,
+1.68%
and 2.5% gain for its competitor LVMH Moët Hennessy Louis Vuitton MC,
+ 2.37%.
The rest of the sector is also on the rise, with Hermès International RMS,
+ 1.25%
shares up 2%, Christian Dior CDI,
+ 1.24%
stock up to 2%.

Piral Dadhania, an analyst at RBC Capital, said luxury goods companies this week benefited from + 10% to 15% price hikes on two of Chanel’s iconic women’s handbags. The sector also performed well in the third quarter and through October, despite more difficult comparisons, COVID-related disruptions in China and a moderate economic environment, to name a few, the analyst said.

“The broader luxury sector should benefit from Chanel’s latest price increases as it creates some leeway in the coming months / quarters, although we don’t expect most brands to embrace one. such an aggressive approach, “said the analyst, who noted that Louis Vuitton hiked prices 6% in October for 1/3 of its SKU mix of handbags, a brand that benefited, according to the call. management’s third quarter results.

The banking sector was on the rise, led by HSBC HSBC,
+ 0.24%

HSBA,
+ 0.87%,
which increased by more than 1%.

The travel industry also climbed, following the well-received results of International Consolidated Airlines IAG,
+ 6.11%,
with these shares up 2.5%. The company reported positive operating cash flow for the first time since the start of the pandemic.

Gains spread across the entire sector, with the Carnival CUK cruise group,
+ 8.45%

CCL,
+ 9.42%
up 7%, TUI TUI group travel,
+ 6.25%
grew by more than 5%, while airlines Deutsche Lufthansa LHA,
+ 6.06%
gained 5% and Ryanair RYA,
+ 2.96%
3.5%.


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