Investing.com – European luxury goods stocks soared on Friday, rebounding from steep losses earlier this week as investors became convinced that further stimulus would boost China’s economy, a key market for these companies.
Data released early Friday showed the world’s second-largest economy grew at its slowest pace since early 2023 in the third quarter, but that was in line with expectations and led to better-than-expected retail growth. Sales figures could potentially provide some optimism.
Additionally, China’s central bank announced a financing plan to initially inject up to 800 billion yuan (more than $110 billion) into the stock market through a newly created monetary policy tool.
This has allowed buyers to return to the European luxury goods market, which relies heavily on Chinese buyers for growth.
05:20 ET (09:20 GMT), burberry (LON:) Share price rose 3.7%; kering (EPA:) rose 5%, Moncler (BIT:) rose 4.2% and LVMH Moët Hennessy Louis Vuitton (EPA:) rose 3%.
Investors should consider buying Chinese consumer stocks, Bank of America said in an Oct. 18 memo, as the world’s second-largest economy continues to roll out stimulus aimed at households. I told the customer that.
The US bank noted that unlike in the past 20 years, the current stimulus package is targeted directly at households. China’s consumption accounts for only 39% of GDP, much lower than in other emerging economies such as Mexico’s 70%, Brazil’s 63% and India’s 60%.
Europe’s luxury goods sector slumped earlier this week after France’s LVMH reported weak third-quarter sales, with stocks posting their biggest one-day decline in a month. .
LVMH, whose brands include Moët & Chandon champagne, Louis Vuitton fashion and Tiffany & Co. jewelry, reported its first quarterly sales decline since the pandemic, largely due to weak demand in China.
