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Nov. 5, 2021, 10:35 a.m. EDT

Handbag wars? Chanel price hikes rally luxury goods makers in Europe

By Barbara Kollmeyer

European stocks perked up further on Friday, benefiting from gains in luxury goods makers and travel-related companies and gains in U.S. stocks after better-than-expected jobs data.

The Stoxx Europe 600 (STOXX:XX:SXXP) rose 0.3% to 484.55, poised for its fifth-straight fresh record close, after banging out new highs all week. The index closed at 483.21 on Thursday. For the week, the Stoxx 600 is up 1.9%, which will be the fifth-straight weekly win in a row.

Of the major regional indexes, the German DAX (XEX:DX:DAX) gained 0.3%, the French CAC 40 (PAR:FR:PX1) jumped 0.9% and the U.K. FTSE 100 (FTSE:UK:UKX) increased 0.4%. The euro (XTUP:EURUSD) and pound (XTUP:GBPUSD) were both lower against a stronger U.S. dollar (IFUS:DXY) . The pound also continued to lose ground after surprise inaction by the Bank of England on Thursday.

Read: Pound falls near September lows as Bank of England surprise continues to reverberate

Fresh data showed German industrial production fell in September for the second straight month as supply-chain bottlenecks weighed on factory output.

Among stocks on the move, drugmakers were lower, with shares of AstraZeneca PLC (NAS:AZN) (LON:UK:AZN) fell 1.9% and Roche (SWX:CH:ROG) fell 1.3%. Novo Nordisk (NYS:NVO) (NYS:NVO) shares fell 3%.

Read: Pfizer shares soar after data finds COVID antiviral re d uced risk of death or hospitalization by 89% in high-risk adults

France’s CAC 40 was lifted by a 3% gain for shares of luxury goods maker Kering (PAR:FR:KER) and 2.5% gain for rival LVMH Moët Hennessy Louis Vuitton (PAR:FR:MC) . The rest of the sector was also up, with Hermès International (PAR:FR:RMS) shares up 2%, Christian Dior (PAR:FR:CDI) stock up 2%.

Piral Dadhania, analyst at RBC Capital, said luxury goods companies have benefited this week from  +10% -15% price hikes on two of privately-owned Chanel’s iconic women’s handbags. The sector has also held up well in the third quarter and through October, despite tougher comparisons, China COVID disruption and a moderating economic environment, to name a few, the analyst said.

“The broader luxury sector should benefit from Chanel’s most recent price increases, as it creates some headroom in the coming months/quarters, even if we do not expect most brands to take as aggressive an approach,” said the analyst, who noted that Louis Vuitton hiked prices 6% in October for 1/3 of its handbag SKU mix, a brand that has benefited, according to a management’s third-quarter earnings call.

The banking sector was higher, led by HSBC (NYS:HSBC) (LON:UK:HSBA) , which was up over 1%.

Also climbing was the travel sector, after well-received results from International Consolidated Airlines (LON:UK:IAG) , with those shares up 2.5%. The company reported positive operating cash flow for the first time since the start of the pandemic.

Gains spread across the sector, with cruise group Carnival (NYS:CUK) (LON:UK:CCL) up 7%, travel group TUI (LON:UK:TUI) rose over 5%, while airlines Deutsche Lufthansa (ETR:XE:LHA) gained 5% and Ryanair 3.5%.

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