European Stocks Pause After Hitting Fresh Record; Hermes Jumps

(Bloomberg) — European stocks paused after hitting a fresh record high on solid luxury sector earnings and as investors were relieved that US tariffs may take weeks to materialize.

The Stoxx 600 Europe Index was little changed at 11:52 a.m in Paris. France’s famed Birkin bag maker Hermès surged as much as 5% after its sales jumped almost 18% in the fourth quarter. 

Miners outperformed, as iron ore prices briefly spiked after a powerful cyclone narrowly missed hitting the world’s main export hub in Australia. Meanwhile, insurance and telecoms sectors were the biggest laggards. 

President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners and told reporters that he would enact import taxes on cars, semiconductors and pharmaceuticals. However, new measures may be weeks away from being implemented, raising the prospect for negotiations. 

“The fact that Trump didn’t explicitly target Europe yesterday and left an April deadline to negotiate with him brings some relief,” said Karen Georges, a fund manager at Ecofi in Paris.

Meanwhile, European stock funds had the largest inflow since January 2023 in the week through Wednesday at $2.5 billion, according to Bank of America Corp. strategists who cite EPFR Global data. That’s a “peace dividend,” the team led by Michael Hartnett wrote in a note.

“Europe has been lifted by the talks between Russia and the US to end the war in Ukraine. A lot of investors are playing that trade, notably through baskets of stocks, which include construction firms,” Georges said. 

Europe’s main regional index has had a strong February so far, as earnings are fueling positive sentiment toward equities. To add to the positive mood, data published on Friday showed the euro-area economy managed to eke out growth at the end of last year after all, with Eurostat revising its initial estimate upwards.

Goldman Sachs Group Inc. raised their 12-month price target on the Stoxx 600 to 580, implying a 4.7% advance from Thursday’s close.

“For European equities, we see a number of potential benefits – lower risk premium, lower inflation, better consumer confidence, stronger economic growth,” a Goldman Sachs team of strategists led by Sharon Bell wrote in a note. 

Among other individual stocks, Umicore SA shares dropped as much as 12%, their biggest fall since June 2022, after the Belgium-based specialty chemicals firm proposed lower dividend and missed on half-year revenues.

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–With assistance from Michael Msika.

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