Hermès leads the way south in Europe as stock market gains melt on Russian-Ukrainian jitters ahead of US long weekend

A turbulent week for European equities was set to end on a negative note, with investors jittery over Russian-Ukrainian tensions heading into the weekend and frowned upon earnings from Hermes and Allianz.

The Stoxx Europe 600 SXXP index,
-0.81%
slipped 0.3% to 462.84, with the weekly loss hovering at 1.4%. The German DAX DAX,
-1.47%
fell by 0.9%, the French CAC 40 PX1,
-0.25%
was flat and the FTSE 100 UKX index,
-0.32%
was also flat.

Investors were preparing for a long weekend and potential developments on the Ukraine-Russia front. As hopes are pinned on a major diplomatic meeting scheduled for next week between US and Russian officials, reports of increased troop buildup near Ukraine have rattled global stocks.

German stocks posted the largest losses, due to a 3% decline in Allianz ALV shares,
-3.78%,
which recorded a loss in the fourth quarter due to a pre-tax provision of 3.7 billion euros for early settlements “with the main investors in the AllianzGI US Structured Alpha funds and in light of ongoing discussions with the US government authorities”.

Hermes International RMS,
-4.14%
was another big decline, with shares of the French luxury goods group down 6% after hitting a record operating margin in 2021, but analysts pointed to concerns over supply issues that affected performance of the last quarter of 2021.

Hermès’ results also did not beat the consensus as evidenced by French groups LVMH Moët Hennessy Louis Vuitton LVMH,
+0.59%
and Kering KER,
+0.41%,
who reported this week.

EDF EDF,
-2.35%
the stock fell almost 3%. The French utility reported an increase in profits in 2021 and a plan to strengthen its balance sheet after the government’s measures to reduce electricity prices. But analysts were wary of the year ahead after such a tough past year for the company.

“We would have expected another round of strong results in 2022, but the review of the availability of its nuclear fleet and the French government’s measures to limit the electricity bill of French consumers will have a dramatic impact on the generation of EDF’s cash flow,” said Nadège Tillier, head of corporate credit research at ING, in a note to clients.

The French government would have announced on Friday that it will provide around 2.1 billion euros ($2.39 billion) to the struggling utility.

Mary I. Bruner