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Nov. 25, 2019, 5:22 a.m. EST

Luxury goods makers lead gains in Europe after LVMH announces Tiffany deal

Trade optimism also drives gains at the start of the week for Europe

By Barbara Kollmeyer, MarketWatch


AFP via Getty Images
Models outside the entrance to the Wall Street store of Tiffany & Co (Photo: TIMOTHY A. CLARY/AFP via Getty Images)

European stock markets traded higher on Monday amid perceived positive steps on U.S.-China trade negotiations, and with deal news boosting the luxury goods sector after LVMH Moët Hennessy — Louis Vuitton said it would acquire Tiffany & Co.

The Stoxx Europe 600 (STOXX:XX:SXXP)  rose 0.7% to 407.40, after gaining 0.4% on Friday, but breaking a six-week winning streak with a weekly loss of 0.5%.

The German DAX (XEX:DX:DAX) rose 0.4% to 13215.82, the French CAC 40 (PAR:FR:PX1) gained 0.5% to 5921.98, and the U.K. FTSE 100 (FTSE:UK:UKX)  was up 0.6% to 7370.45.

U.S. stock futures rose after equities closed higher on Friday, though major indexes halted a string of multi-week gains. Investors stayed focused on trade issues in a holiday-shortened week; U.S. markets will close on Thursday for Thanksgiving Day.

In what could be an important step forward for trade, Beijing said on Sunday that it will increase penalties for intellectual property violations, a topic that has been a key sticking point for trade negotiations with the U.S. Investors were also eyeing a tweet from the Global Times — run by China’s ruling Communist Party — that said Beijing and Washington are “very close” to an initial trade deal.

Europe was also playing catch-up after President Donald Trump said on Friday that there was a “good chance to make a deal.”

The positive vibes on trade fed through to auto stocks, with Daimler (FRA:DE:DAI)  up 1.2% and Volvo (OME:SE:VOLV.B) rising 1.6%. Miners also rose, with Rio Tinto (LON:UK:RIO)   (NYS:RIO)  up 1.2% and Glencore (LON:UK:GLEN)  up 1.3%.

Meanwhile, the clothing and footwear sector was doing the heavy lifting for Europe, after LVMH (PAR:FR:MC)  announced a $16.2 billion deal for Tiffany (NYS:TIF) , ending weeks of speculation. Shares of LVMH climbed 1.8%.

That news triggered gains across the luxury goods sector, with LVMH rival Compagnie Financière Richemont (SWX:CH:CFR)  up 1%, while shares of Swatch Group (SWX:CH:UHR) , Christian Dior (PAR:FR:CDI)  and Burberry Group (LON:UK:BRBY) rose 1.4%.

Shares in Novartis (NYS:NVS)   (SWX:CH:NOVN)  slipped 0.3% after news the Swiss pharmaceutical group has reached a $9.7 billion deal for U.S.-based The Medicines Company . Novartis will pay $85 per share for the New Jersey-based biotech.

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