(News Bulletin 247) – The shares of LVMH, Hermès and Kering recorded sharp increases on Friday, supporting the Parisian index. Investors are positioning themselves ahead of the earnings season, next month.

Luxury shines again this Friday. LVMH, Kering and Hermès respectively won 2.7%, 2.6% and 1.9% around 3:40 p.m., thus signing the first, fourth and eighth strongest growth in the CAC 40, which gained 1.2%. All three stocks had lost ground on Thursday.

More broadly, between mid-May and mid-June, luxury experienced a market air pocket, with profit-taking and unattractive economic indicators in China, the world’s second-largest luxury market, which is hot on the heels of UNITED STATES. In addition, some research departments, Deutsche Bank in particular, felt it was time to be selective in this sector, given the high valuations.

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A technical rebound?

Nevertheless, “it may be a good time to get back on the stocks, and the market can anticipate excellent results for the second quarter, with a rebound in China in the second quarter, certainly helped by a very favorable comparison base, and good growth rates in Europe. As for the United States, certainly a deceleration is observed but one can think that it is not catastrophic”, estimates a financial intermediary.

“Luxury stocks had fallen a lot previously so we can perhaps observe a small technical rebound on these securities”, abounds Jie Zhang, analyst at the independent research office AlphaValue.

“The week was also rich in economic information, but the luxury sector is very driven by the macroeconomics,” she adds.

Luxury remains, in fact, a sector that is quite sensitive to macroeconomics. However, retail sales in the United States for the month of May, published on Thursday, showed some resistance. They thus progressed by 0.3% while the economists polled by the wall street journal anticipated a decline.

Interviewed by Bloomberg TVLVMH CEO Bernard Arnault said on Thursday that he was “optimistic” about the luxury market in China, despite signs raising questions about the situation in the world’s second-largest economy.

“In addition, earlier this week press reports reported that the Chinese government was considering measures to support growth, while activity is a little disappointing in China. This could for example concern real estate, which represents around 70 % of Chinese household wealth,” adds Jie Zhang.

Earlier this week, several media reported that the Chinese government was considering measures to support the economy. The People’s Bank of China on Tuesday lowered one of its main key rates for the first time in ten months in order to encourage the recovery.