Monday saw a decline in European stocks as Richemont, a luxury goods company, suffered from weaker-than-anticipated organic sales growth and concerns over demand from China’s second-largest economy.
European shares slip: By 8:02 GMT, the STOXX 600 index for all of Europe was down 0.3%, with luxury industry titans leading the selling push.
After weakness in the Americas dragged on first-quarter organic sales growth, shares of Richemont, the second-largest luxury company in the world, plummeted 8.0% and were on track for their worst one-day percentage down in over a year.
“Up to this point, despite the Fed’s vigorous tightening, U.S. consumption has held up fairly well. According to the Richemont data, spending is beginning to decline, according to Stuart Cole, chief macroeconomist at Equiti Capital.
LVMH, the most valuable firm in Europe, Hermes, and Kering all saw their shares fall between 1% and 3.7%.
The greatest sectoral loser was the personal and household products index, which includes luxury companies, down 2.2%. Data released on Monday showed that China’s economy expanded at a sluggish rate in the second quarter due to weakening demand, further dampening confidence and increasing pressure on policymakers to provide additional stimulus.
Cole suggests that both Chinese and American consumption is decreasing, leading to a market reaction that depresses stock values.
With a 1.4% fall, the mining industry was the second-biggest loser as metal prices were pressured by worries about demand from main user China.
Market Highlights: Fed Expectations, Earnings Season, and Promising Gains in Banking and Healthcare Sectors
The benchmark STOXX 600 index experienced its largest weekly percentage increase since the end of March the week before on expectations that the Federal Reserve will soon stop raising interest rates due to slowing U.S. inflation.
Analysts have cautioned that other significant central banks, in notably the Bank of England, still have additional tightening to go.
With major corporations like Tesla scheduled to release results this week after major US banks started the second-quarter results season on Friday, earnings are another important topic of discussion.
After the Italian bank struck a payments agreement with private equity fund FSI, shares of Banco BPM increased by 2.1%.
The action helped the banking sub-index rise 0.5%, and healthcare equities also helped the STOXX 600 keep losses to a minimum.
On the strength of promising findings from its therapeutic research for neurological disorders, Argenx SE increased by 26% to take the top spot in the benchmark index.