Following LVMH’s disclosure of underwhelming Q2 revenue growth, Europe’s primary stock indices, to which luxury shares contributed significantly, experienced a downfall, highlighting renewed worries over muted Chinese consumption.
Across in Dublin, the Iseq index matched its European peers and declined by 0.6 per cent. However, the trading session brought a sigh of relief for Ryanair after their share price rose by 1.1 per cent to €13.78, recovering slightly from a fall of over 21 percentage points, a fallout of Monday’s trading announcement.
Meanwhile, agribusiness consortium, Origin Enterprises, made marginal profits, closing at €3.05 per share with a rise of 0.7 per cent. Shares in Datalex, an airline software firm, appreciated by 0.5 per cent ending the trading session at 42c per share. On a downbeat note, Kingspan’s shares tumbled by 2.5 per cent to €82.30 per share. Home construction companies Cairn and Glenveagh also depreciated by 1.3 per cent and 0.6 per cent, closing at €1.88 and €1.37 per share respectively.
Based out of Dublin, convenience food group Greencore saw its shares in London ascend by over 1 per cent to £181.80, following its upgraded full-year earnings forecast that was backed by rising revenue.
In London, both the FTSE 100 and FTSE 250 saw little movement. The country’s personal goods shares dipped by 1.3 per cent, with luxury brand Burberry decreasing by 2.1 per cent after LVMH, the largest luxury group worldwide, announced that their sales growth had dipped during Q2. Market-wide losses were primarily driven by this sector, with a majority of sub-sectors including finance and energy trending downwards. However, car and components shares showed a rise of 2.1 per cent following mining stocks. Aston Martin’s share price surged by 6.5 per cent subsequent to the luxury car manufacturer disclosing its mid-year results.
In recent business news, Ascential saw a significant increase of nearly 26% to lead the FTSE 250, following the recent announcement by Informa of an agreement to purchase the Cannes Lions Festival proprietor for a sizable £1.2 billion. Meanwhile, the much-anticipated update from Lloyds of London, set for Thursday, is expected to initiate the UK bank results season.
In parallel, Europe’s premier index, the Stoxx 50, steeply declined by over 1%, largely driven by the drastic fall in luxury stocks. Similarly, the cross-Continental Stoxx 500 also depressed by 0.7%. Luxury brand owner, Luis Vuitton’s parent company, LVMH, faced a considerable downtrend of 4.5% in trade values after reporting a disappointing 1% growth in revenue to €20.98bn for the second quarter, falling below the expected 3% rise. Despite the geographical dominance of China in Asia’s excluding Japan market, sales plummeted by 14% in this quarter, raising concerns over luxury demand in the globally second-largest economy.
This negative trend was similarly mirrored in other luxury brands, with Kering, Gucci’s owner, also stunned by a 4.5% drop. Richemont, proprietor of Cartier, saw a 1.7% reduction, and luxury purse manufacturer, Hermes experienced a 2% decrease.
However, it was a variation in the European banking sphere, as a number of major lenders revealed their figures on Wednesday. The Spanish lender, Santander, celebrated a 2.7% surge following the reported record-breaking net profit rise of 20% year-on-year. On the other hand, Deutsche Bank suffered an over 8% plummet in share values as the cancellation plans for a future share buyback and an increase in bad loan fees were unexpectedly announced.
In the USA, Wall Street experienced a fall on Wednesday, led primarily by the tech-focused Nasdaq due to below-par quarterly results from Alphabet and Tesla that introduced doubts about the longevity of the Big Tech and AI-fueled 2024 equity surge.
Tesla’s stock drastically dropped by 11.2%, amounting to over a shocking $83 billion loss in market value if the losses from Tuesday’s end are taken into account. This massive slide followed the report of their lowest profit margin over a five-year span and a miss in the second quarter’s earnings predictions. Despite a beat in the second quarter’s earnings, Google parent Alphabet faced a 4.1% loss as investors diverted their focus to a decline in the growth of advertising and an alarming year high in capital expenditures.
Alphabet’s deficits have highlighted the substantial profit expectations for the so-called ‘Magnificent Seven’. These are giant tech equities that have recorded impressive two- and three-digit percentage increases during 2024, bolstered by the hopeful outlook surrounding AI application and the forecast of a premature commencement of interest-rate deductions by the Federal Reserve. Additional information is cited from Reuters and Bloomberg.