Markets
Kering Fell 16.6% After Gucci's Sales Dropped 6% and Safran Lost 10%. Moody's Kept France at Aa3 After the Close, and the Kospi Erased a 4% Fall
Kering fell 16.6% in Paris on Friday after Gucci's third-quarter sales dropped 6% on a comparable basis. The group will close 125 stores by year-end. Safran lost 10% after its results, pulling European defence stocks to their worst day since June 1. The Stoxx 600 slipped 0.31% for a weekly loss of about 1.4%. After the close, Moody's held France at Aa3 with a negative outlook. In Seoul, the Kospi recovered from a 4.12% intraday drop.
The largest move in Europe on October 23 came from a company that has nothing to do with oil or chips. Kering, the owner of Gucci, fell 16.6% in Paris after reporting third-quarter revenue of about €3.35 billion, down 1% on a comparable basis, and Gucci sales of about €1.29 billion, down 6%. The group said it would close 125 stores by the end of the year. Gucci is most of Kering's profit, and a 6% decline in a brand Kering has been trying to revive for years told investors that the turnaround is not yet showing in the shops. The European luxury sector fell 3.6% with it.
Defence had a worse day than luxury in percentage terms. Safran, the French maker of aircraft engines and military equipment, fell 10% after its results, and the European aerospace and defence sector lost 3.8%, its worst session since June 1. On the other side of the Paris market, L'Oréal rose 5.6% after third-quarter sales beat forecasts, a reminder that the consumer is not one trade. The Stoxx 600 ended down 0.31% at 635.77 and lost about 1.4% on the week, its steepest weekly decline since early September; Germany's DAX fell 0.75% to 25,181.65, France's CAC 40 0.36% to 7,782.82 and London's FTSE 100 0.32%.
France's bonds were waiting for a different verdict. The 10-year OAT yield had reached 5.14% during the week, its highest since 2002, and Moody's was scheduled to review the country after the close. It left France's rating at Aa3 with a negative outlook, the outcome that avoided a downgrade without removing the warning. Earlier on Friday the eurozone's composite PMI had fallen to 51.9, below the 52.7 expected, with French services contracting again, which is the kind of data that makes a deficit harder to close.
Asia's day had its own reversal. South Korea's Kospi fell as much as 4.12%, to 5,305.98, in the morning as Thursday's chip sell-off reached Seoul, then closed up 0.30% at 5,550.30. The turn came from SK Hynix, which rose 4.42% after it halted its review of a US listing for its Solidigm storage unit, according to Korean press reports. Japan's Nikkei fell 0.34% to 62,693.16 and lost about 4% on the week; Hong Kong's Hang Seng rose 0.69% but ended the week down 4.52%. Taiwan was closed for a holiday.
A swing from −4% to a gain in one session is the kind of move that tends to mean a market was oversold rather than that its problem has been solved. Seoul opens on Monday into the week of the US megacap reports, when several of SK Hynix's largest customers publish their capital-spending plans.