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MARKETS DIRECT Luxury stocks to the rescue!


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Things looked pretty bad about an hour ago when European futures plunged into the red after a tough session on Wall Street where banking stocks, thanks to Goldman Sachs earnings, and tech stocks were hammered.

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But European equity markets have so far avoided a sell-off thanks to luxury stocks that are to Old Continent investors what FAANGS are, or were, to American traders.

Shares of Switzerland’s Richemont topped the STOXX 600 and rose 7% after the world’s second-largest luxury group reported demand for chains for jewelry and watches.

This has had a positive effect on the whole sector and French heavyweights LVMH, Kering and Hermès are on the rise and lift the Paris CAC 40 benchmark index above the waterline mark.

Burberry in the UK was another strong performer, up nearly 5% as the luxury brand said its full-year profits would beat market expectations.

The retail sector (.SX86P) was also on track, gaining more than 2%, with Spain’s Inditex leading the pack after Goldman Sachs upgraded the stock on earnings and falling. resilient cash flow.

Marks & Spencer, Zalando (ZALG.DE) and Kingfisher (KGF.L) all rose more than 2%.

The tech sector (.SX8P) is also showing signs of resilience, losing just 0.1%, a better fate than the Nasdaq last night.

The start of the earnings season was also quite positive for Pearson shareholders, who saw the stock jump 5% after the education group raised its forecast.

(Julien Ponthus)



Despite all the turmoil in financial markets yesterday, the Nasdaq getting dangerously close to correction territory and closing below a key 200-day moving average is probably the least surprising feature for investors.

After all, dumping expensive tech and growth stocks when bond yields rise as the Federal Reserve embarks on an interest rate hike cycle is considered basic stock market trading 101.

Overweighting bank stocks amid tighter monetary policy is another common trade, but this one backfired dramatically when Goldman Sachs (GS.N) missed quarterly earnings expectations. and plunged 7% as higher spending weighed on its fourth-quarter earnings. Read more

Traders are now waiting for Bofa (BAC.N) and Morgan Stanley (MS.N) to update the market today and see if the key theme for this new earnings season could simply be rising costs, including wages, which weigh on profits in all sectors.

With European and US equity futures down more than 0.5%, it’s fair to say that there is palpable uncertainty on this front, as the other structural forces in this tightening cycle are only strengthen in these first days of 2022.

The dollar is inflated against rival currencies with benchmark US Treasury yields trading at two-year highs as the Federal Reserve shows signs of being more aggressive in tackling inflation while in Europe , the yield on German 10-year bonds exceeded 0% for the first time since May 2019.

Moreover, the latest data shows that UK consumer prices rose to 5.4% in December, their highest level since March 1992, a level that could encourage the Bank of England to accelerate the tightening. Read more

Even the cautious Bank of Japan warned investors that inflation could accelerate faster than expected if commodity costs continue to soar. Read more

It came as oil prices rose for a fourth day to levels last seen in 2014, as a breakdown in a pipeline linking Iraq to Turkey heightened concerns over already tight supply prospects. Read more

South Dakota

Key developments that should further guide markets on Wednesday:

– UK inflation hits highest level in almost 30 years Read more

-German harmonized inflation +5.7% y/y in December

Housing starts in the United States

US 20-Year Treasury Bond Auction

US profits: Bofa, State Street Morgan Stanley, Proctor and Gamble, Bancorp, Alcoa

Central banks: BoE Governor Bailey and Deputy Governor Cunliffe speak

Fritz Zurbrugg, Vice President of the Swiss National Bank, speaks

(Julien Ponthus)


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