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

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
SXXP,
+0.20%

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
DAX,
+0.13%

gained 0.3%, the French CAC 40
PX1,
+0.79%

jumped 0.9% and the U.K. FTSE 100
UKX,
+0.32%

increased 0.4%. The euro
EURUSD,
-0.27%

and pound
GBPUSD,
-0.19%

were both lower against a stronger U.S. dollar
DXY,
+0.17%
.
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
AZN,
-1.46%

AZN,
-1.21%

fell 1.9% and Roche
ROG,
-0.85%

fell 1.3%. Novo Nordisk
NVO,
-2.53%

NVO,
-2.53%

shares fell 3%.

Read: Pfizer shares soar after data finds COVID antiviral reduced 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
KER,
+2.57%

and 2.5% gain for rival LVMH Moët Hennessy Louis Vuitton
MC,
+2.32%
.
The rest of the sector was also up, with Hermès International
RMS,
+1.73%

shares up 2%, Christian Dior
CDI,
+2.04%

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
HSBC,
+0.56%

HSBA,
+1.11%
,
which was up over 1%.

Also climbing was the travel sector, after well-received results from International Consolidated Airlines
IAG,
+4.06%
,
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
CUK,
+5.62%

CCL,
+6.72%

up 7%, travel group TUI
TUI,
+6.59%

rose over 5%, while airlines Deutsche Lufthansa
LHA,
+5.56%

gained 5% and Ryanair
RYA,
+3.21%

3.5%.

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