Europe close: Luxury sector lifts Stoxx 600 to new record

(Sharecast News) - Strong gains from the luxury sector on the back of Chinese stimulus measures gave European stock markets a big boost on Thursday, sending the Stoxx 600 to another record high. The Stoxx 600 finished the day 1.4% higher at 525.61, surpassing its previous peak of 525.05 reached on 30 August.

Major equity benchmarks across Frankfurt, Paris, Milan and Madrid all finished with gains of at least 1.4%. Zurich's Swiss Market Index rose 0.5% after a rate cut from the country's central bank, while London's FTSE 100 edged just 0.2% higher as upside was limited by weakness in the energy sector as oil prices tumbled.

China's ruling politburo pledged to increase fiscal support for the domestic economy, giving rise to optimism that more intervention was on the way in a week where the country's central bank unveiled a swathe of stimulus including rate cuts.

"The most recent actions suggest that the authorities are feeling a sense of urgency as Beijing's 5% economic growth objective for the year begins to elude them," said Patrick Munnelly at Tickmill Group."Nevertheless, investors found cause for optimism. After months of market anticipation, the Chinese authorities are finally acknowledging the significant amount of work needed to relaunch the world's second-largest economy."

SNB cut, German confidence

In other news, the Swiss National Bank cut interest rates on Thursday to 1.0% from 1.25%, in line with expectations, but indicated that further rate cuts were on the cards soon. This marked the third rate cut this year and brought the policy rate down to its lowest level since early 2023.

The SNB said in a statement: "Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter. Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months."

Meanwhile, the GfK German consumer climate gauge improved more than expected this month, but confidence still remains well below the historic average as declining economic expectations continue to cloud the long-term outlook.

The headline index rose by 0.7 points to -21.2, up from a revised -21.9 in September. However, with Germans showing a renewed willingness to save, the consumer climate remains relatively gloomy.

Market movers

Luxury goods stocks, all heavily exposed to the Chinese market, were once again in favour, providing a big lift to the Cac 40 in Paris in particular. French-listed names like Remy Cointreau, Kering, LVMH, Christian Dior and Hermes all made strong gains, sending the Cac 40 up 2.3%.

Listed luxury brands elsewhere in Europe, such as Burberry, Moncler and Watches of Switzerland, also outperformed.

French videogame maker Ubisoft slumped by 13% after the company postponed the release of 'Assassin's Creed Shadows' by three months to February 14 and cut net bookings guidance.

Oil stocks were underperforming the wider market as Brent crude prices tanked on rumours Saudi Arabia was set to abandon its unofficial price target of $100 per barrel, with an unwinding of voluntary production cuts starting in December.

Shell, BP, TotalEnergies and Repsol all finished with heavy losses as the price of crude sank 2% to $71.43 a barrel, hitting a low of $70.25 during the session.