European Stocks Get LVMH Boost as US Futures Slip: Markets Wrap

(Bloomberg) — European stocks rose on Friday, lifted by a raft of forecast-beating earnings and expectations that euro-area interest rates will start falling from April.

Most Read from Bloomberg

The Stoxx 600 index rose 0.9%, with LVMH, the maker of luxury Louis Vuitton handbags, jumping 10% on back of a strong increase in fourth-quarter sales. Luxury peers Moncler SpA and Richemont also rallied as Barclays Plc strategists upgraded their recommendation on European luxury stocks.

Contracts on the S&P 500 and the Nasdaq 100, on the other hand, signaled a halt to six days of dizzying gains that propelled Wall Street stocks to records. Intel Corp. fell more than 11% in premarket trading after a bleak forecast that also pressured technology stocks including Advanced Micro Devices Inc. and Nvidia Corp.

Broadly though, optimism is still running high on equities, and investors channeled $17.6 billion into global equity funds in the week through Jan. 24, said Bank of America Corp. strategists, citing EPFR data. The rally has been fed by strong earnings and conviction the Federal Reserve and European Central Bank are gearing up to cut interest rates.

Vincent Juvyns, global market strategist at JPMorgan Asset Management, noted funds that started the year with big cash positions were under pressure to buy stocks.

“Markets are now comfortable with the idea of a soft landing,” Juvyns said. “Central banks have confirmed that interest rate cuts would come rather later than was first expected, but that message has now been digested by the market.”

The view of a soft landing for the US economy was confirmed by Thursday’s gross domestic product data. Investors will get another key reading of US pricing pressures later Friday, with the release of the core personal consumption expenditures index, the Fed’s preferred gauge of underlying inflation.

“There was something for everyone in yesterday’s data. The soft landing scenario looks good for earnings, but it also looks like the Fed is succeeding in bringing inflation down, which has benefits for bonds too,” said Sarah Hewin, head of Europe and Americas research at Standard Chartered Bank.

German bunds extended a rally that was sparked on Thursday, when President Christine Lagarde’s gave a muted affirmation that the ECB may begin lowering interest rates from around mid-2024.

Earlier in Asia, Chinese and Hong Kong shares dropped after the biggest three-day rally since 2022, shrugging off fresh stimulus signals from Beijing. However, Bank of America highlighted a record $12.1 billion of inflow into Chinese equity funds, a possible sign investors are tiptoeing back into the beaten-up market.

Corporate Highlights:

Visa Inc. posted a profit that beat Wall Street predictions as credit-card spending climbed amid strong US economic growth.
Volvo AB is gradually reducing production as the truckmaker brings output in line with normalizing demand following years of supply-chain disruptions that left manufacturers with record order banks.
Remy Cointreau posts its biggest intraday gain since March 2020, after the cognac maker reported third-quarter results.
Apple Inc. is embarking on a historic overhaul of its iOS, Safari and App Store offerings in the European Union, aiming to placate regulators set to impose tough new antitrust rules.

Key events this week:

US personal income/spending, PCE deflator, pending home sales, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 5:22 a.m. New York time
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.9%
The MSCI World index was little changed

Currencies

The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.1% to $1.0857
The British pound rose 0.1% to $1.2727
The Japanese yen was little changed at 147.75 per dollar

Cryptocurrencies

Bitcoin rose 0.6% to $40,162.84
Ether fell 0.2% to $2,213.51

Bonds

The yield on 10-year Treasuries declined two basis points to 4.10%
Germany’s 10-year yield declined three basis points to 2.26%
Britain’s 10-year yield declined three basis points to 3.95%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Joanna Ossinger and Winnie Hsu.