Luxury Goods, Gaming Stocks Rally on China's Central Bank Stimulus

By Sabela Ojea

China's central bank stimulus package boosted stocks in the luxury and gaming sectors, which are expected to benefit as the country works to support its weakening economy and jumpstart consumer spending.

Shares of luxury goods companies Kering, LVMH and Burberry, and cosmetics player Estée Lauder, which rely of Chinese consumers for a bulk of their sales, all rose about 10%.

On the gambling side, companies with a large presence in the Chinese region of Macau such as Melco Resorts & Entertainment, Wynn Resorts and Las Vegas Sands saw their share prices rally, led by Melco Resorts nearly 16% rise.

Shares in Yum China, the operator of KFC, Pizza Hut and Taco Bell in the Asian giant, climbed 14% on the news.

The People's Bank of China said it would cut its benchmark interest rate and lower the amount of cash that banks need to hold in reserve in a move aimed at freeing up more resources for lending. It also said it would cut the interest rate payable on existing mortgages and lower down payments for second homes.

The easing measures come at a time when the Chinese economy is at risk of missing the government's official growth target of around 5% for the full year. Investment banks including Goldman Sachs and UBS have cut their forecasts for economic growth this year to below that goal, saying more government and central-bank support was needed to drive faster growth.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

September 26, 2024 15:47 ET (19:47 GMT)

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