European equities stopped after reaching a new high on strong luxury sector earnings and investors were happy that US tariffs might take weeks to implement. At 11:52 a.m. in Paris, the Stoxx 600 Europe Index had remained rather stable. Hermès, the iconic Birkin bag maker from France, rose as much as 5% after reporting almost 18% growth in fourth-quarter revenue.
Miners did well, with iron ore prices momentarily rising after a major storm narrowly missed Australia, the world’s largest export center. Meanwhile, the insurance and telecom industries were the largest laggards. President Donald Trump directed his government to examine putting reciprocal tariffs on a number of trading partners, and he warned reporters that he would levy import levies on automobiles, semiconductors, and medicines. “The fact that Trump didn’t explicitly target Europe yesterday and left an April deadline for reaching an agreement with him brings some relief,” said Karen Georges, a fund manager at Ecofi in Paris.
Meanwhile, European stock funds had the highest inflow since January 2023 in the week ended Wednesday, totaling $2.5 billion, according to Bank of America Corp. analysts citing EPFR Global data. That is a “peace dividend,” according to a letter from the team led by Michael Hartnett. “Russia and the United States’ discussions to settle the conflict in Ukraine have buoyed Europe. A lot of investors are playing that trade, particularly through stock baskets that contain construction companies,” Georges added.Â
Europe’s major regional index has enjoyed a great February thus far, with results boosting favorable sentiment toward stocks. To add to the upbeat atmosphere, figures released on Friday revealed that the eurozone economy did, in fact, increase at the end of last year, with Eurostat adjusting its earlier estimate upwards.
Goldman Sachs Group Inc. boosted its 12-month price target for the Stoxx 600 to 580, representing a 4.7% increase from Thursday’s finish. “For European equities, we see a number of potential benefits – lower risk premium, lower inflation, better consumer confidence, and stronger economic growth,” said a Goldman Sachs analyst team led by Sharon Bell in a note. Umicore SA shares fell up to 12%, the most since June 2022, after the Belgium-based specialty chemicals business recommended a smaller dividend and failed half-year sales targets.
