By Sruthi Shankar
(Reuters) -European stocks rose on Wednesday as upbeat results from France's LVMH sparked a rally in luxury groups and quelled concerns that slowing global growth and tariff wars are taking a toll on corporate health.
LVMH shares surged more than 13%, set for their best one-day gain since September 2001, after the owner of Louis Vuitton and Dior reported better-than-expected sales in the third quarter, driven by improved demand in China.
LVMH is considered a bellwether for the luxury
sector, which has undergone a prolonged slump since the winding down of the post-pandemic boom.
"We think the results are really positive for the sector and probably the peak bearishness is behind us," said Benedicte Lowe, equity derivatives strategist at BNP Paribas.
Other luxury stocks such as Hermes, L'Oreal, Richemont and Moncler rose in the range of 2.7% and 8.8%. An index of Europe's top 10 luxury names rallied 6.9%, heading for its best day since January.
The luxury-heavy French blue-chip index jumped 2.5%, while the Europe-wide STOXX 600 index rose 0.7% by 0916 GMT.
Among other companies that reported, ASML rose 3.5% after the world's biggest supplier of computer chip-making equipment beat market expectations for third-quarter orders and fourth-quarter forecasts.
TotalEnergies climbed 3.1% after the French oil major said it expects to report an increase in third-quarter results as higher upstream production and improving crude refining margins offset lower oil prices.
Third-quarter earnings estimates for STOXX companies have improved in recent weeks, with analysts forecasting a 0.5% increase in profit growth on average, as per LSEG IBES data, compared with a 0.6% drop seen at the start of the earnings season. It is still a sharp deterioration from the 7.8% growth seen in the third quarter of 2024.
BNP Paribas' Lowe said the European blue-chip results indicate that we might be past "the worst point" in the earnings cycle and investors could focus on "the upside story" for continental stocks.
Largely positive earnings reports from big U.S. banks on Tuesday and comments from Federal Reserve Chair Jerome Powell that boosted bets of rate cuts this year, added to the upbeat mood among equity investors. [MKTS/GLOB]
German copper producer Aurubis shed 4.8%, with a trader pointing to majority shareholder Salzgitter launching a 500 million euro bond offer exchangeable for Aurubis shares as the reason for the drop.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Eileen Soreng)
