European shares edge higher, luxury stocks dampened by weak results

(Reuters) – European stocks inched higher on Tuesday as investors held out for more U.S. stimulus to limit the economic damage of the COVID-19 pandemic, brushing aside the latest batch of underwhelming quarterly earnings reports from luxury goods makers.

The pan-European STOXX 600 , German DAX .GDAXI and London’s FTSE 100 .FTSE all rose 0.4%.

After worries of a resurgence in coronavirus cases knocked risk sentiment on Monday, investors waited for the conclusion of a U.S. Federal Reserve meeting and talks over another round of fiscal stimulus for the U.S. economy.

“Even if tomorrow is unlikely to be the right moment for a more expansionary monetary policy approach, the Fed will no doubt sound prepared for further easing,” Commerzbank analysts told clients in a note.

Luxury giant LVMH (LVMH.PA) slid 5.0% as store closures sparked by the COVID-19 pandemic tore a hole into the Louis Vuitton owner’s second-quarter sales even as it said sales momentum picked up in June and had especially improved in China.

“The stronger-than-expected top line reassures about the superior resiliency of the group and should prevail on the disappointing profitability, which is a shorter-term issue,” Paola Carboni, an analyst at Equita wrote about LVMH’s results.

Gucci owner Kering (PRTP.PA) and France’s Hermes (HRMS.PA) slipped nearly 2%, while Moncler (MONC.MI), which makes luxury puffer jackets, shed 4.4% after reporting a first-half operating loss for the first time in its history.

European stocks are on course to end July with gains as hopes of a COVID-19 vaccine and unprecedented economic support for the euro zone lifted appetite for the region’s markets, but fears of a second wave of infections have slowed the pace of gains.

Peugeot maker PSA Group (PEUP.PA) rose 3.8% as it held on to its margin target despite a fall in profitability in the first half of 2020, and said a recovery in sales had extended into July.

European automakers .SXAP gained 0.6% as the Ifo institute said export expectations in the German manufacturing sector rose in July, with the automotive industry among the biggest winners.

Online takeaway food company Delivery Hero SE (DHER.DE) jumped 3.8% after it raised its forecast for 2020 sales after nearly doubling quarterly revenues, benefiting from coronavirus lockdowns and investments in ultra-speed deliveries.

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