NextFin news, European shares closed near a three-week high on Monday in markets across Europe, driven by strong gains in luxury and defence stocks as investors awaited upcoming policy decisions from the US Federal Reserve and other central banks.
The pan-European Stoxx 600 index ended 0.42% higher at 557.16 points, with the region-wide luxury index leading the gains with a 1.9% rise. Key luxury companies such as LVMH and L’Oreal jumped 2.7% and 1.9% respectively, while Kering surged 5.8%. Brunello Cucinelli shares rose 5.6% following JPMorgan’s initiation of coverage with an “overweight” rating.
The spotlight on French luxury stocks intensified after the death of designer Giorgio Armani, who reportedly included instructions in his will prioritizing potential sales of his fashion house to LVMH, L’Oreal, and eyewear leader EssilorLuxottica, according to The Business Times.
Meanwhile, the European aerospace and defence index continued its historic rally, climbing 1.74% to a new high. Investors have increasingly favored defence stocks amid rising military spending by European governments to strengthen NATO and reduce reliance on the United States. Since Russia’s invasion of Ukraine in February 2022, the defence index has surged over 200%.
European semiconductor stocks also contributed to the gains, with BESI, ASML, and ASMI rising between 5.6% and 6%.
Market optimism was further supported by expectations that the US Federal Reserve will announce at least a 25-basis-point interest rate cut on Wednesday, marking its first potential easing move this year. Other central banks, including those in Britain, Japan, and Canada, are also scheduled to announce policy decisions this week.
Despite Fitch’s downgrade of France’s sovereign credit rating late last Friday, the benchmark CAC 40 index rose 0.9% to a three-week high, and domestic bonds remained stable. Analysts noted that optimism about Fed rate cuts is positively influencing global financial markets, including French equities.
UBS shares increased 2.3% following reports that the Swiss lender is considering expanding into the United States in response to proposed new capital requirements by the Swiss government. Fuel retailer Rubis saw its shares jump 7% after bids from CVC Capital Partners and Trafigura lifted it to the top of the Stoxx 600 index.
Conversely, AstraZeneca shares declined 3.2% after Handelsbanken downgraded the drugmaker and Reuters reported a pause in a major investment in its home market.
These developments occurred on Monday across European financial markets, as investors positioned themselves ahead of significant central bank meetings this week.
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