By Geoffrey Smith
Investing.com -- It’s been a tough 12 months for most sectors in Europe’s stock market. Exporters of capital goods have been hit by the U.S.-China trade war, banks and financial services hobbled by negative interest rates, consumer stocks struggling to escape the shackles of low wage growth and demographic decline.
But one sector has been a relatively constant bright light, and it’s leading the way again this Thursday. Luxury goods makers are roaring ahead after another strong quarter for LVMH (PA:LVMH), the French drinks-to-fashion group.
LVMH announced after the bell on Wednesday that its revenue grew 16% on the year in the first quarter and said the positive trends that had helped it to a record year in 2018 were still in place. Most remarkably, in a world economy that is supposedly suffering a synchronized slowdown, the group said that “all geographic regions are experiencing good growth.”
The news has sent the stock up 3.1% on a day when most indexes are down, due in part to frustration at the prospect of another six months of uncertainty over Brexit. As of 04:00 AM ET (0800 GMT), the benchmark STOXX 600 was at 385.12, down 1.56 points or 0.4%. The FTSE 100 was down 0.5%, while the German DAX was down 0.4%. The Paris CAC 40 was outperforming, down less than 0.1%, thanks mainly to its luxury names.
As has often been the case, LVMH’s performance is supporting the rest of the sector. Gucci owner Kering (PA:PRTP) and scarf-maker Hermes (PA:HRMS) were close behind it at the top of the CAC 40, while Italian rivals Salvatore Ferragamo (MI:SFER) and Moncler (MI:MONC) were also both among the best performers in Milan.
The results have distracted attention away from one less pleasant piece of news that may come back to haunt the sector in due course. French police raided the premises of some of the country’s drinks makers on Wednesday on suspicion of anti-competitive practices. Pernod Ricard (PA:PERP), a drinks maker that doesn’t have the same exposure to fashion as the other stocks in the sector, is the notable laggard this morning, rising only 0.3%.