Europe open: Stoxx up on US rally while Richemont lifts luxury shares

(Sharecast News) - European shares continued their rally at the open on Thursday as falling US core inflation, higher bank earnings and easing bond prices boosted sentiment, while luxury goods shares were surging after upbeat results from Richemont. The pan-European Stoxx 600 index was up 0.58% at 518 points with all major bourses higher.

US stocks surged on Wednesday after a closely watched inflation report showed an easing of underlying price pressures while quarterly results from the banking sector smashed expectations.

Earnings from heavyweights Goldman Sachs, JPMorgan Chase, Wells Fargo and Citigroup were lifting sentiment with share prices of all four banks rising strongly.

According to the Department of Labor, the headline consumer price index for December was 2.9% higher than the year before, with the annual rate of inflation picking up for the third straight month due to a jump in gas prices. This was up from 2.7% in November but in line with economists' forecasts.

However, core annual inflation, which strips out volatile food and energy prices, eased to 3.2% after three straight months at 3.3%, coming in slightly below expectations.

"European markets are waking up with a spring in their step, thanks to cooling US core inflation and upbeat bank earnings fuelling risk-on sentiment," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

In the UK, GDP data for November showed growth of only 0.1%, missing expectations of 0.2%.

"With inflation easing and sluggish economic growth, a 25bps rate cut by the Bank of England in February seems increasingly likely. UK government bond yields have felt an immediate impact, pulling back yesterday from multi-decade highs, offering some relief to risk-on investors and borrowers alike," Britzman added.

In equity news, luxury goods were in focus after Richemont reported a 10% increase in fiscal third-quarter sales, sending its shares soaring 15%. The news boosted peers LVMH, Kering and Christian Dior, while retailers Zalando, Moncler, Burberry and Hermes also gained.

Reporting by Frank Prenesti for Sharecast.com