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Consumer Cyclicals
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Market Cap £95.85bn
Enterprise Value £141.12bn
Revenue £38.35bn
Position in Universe 8th / 849

LIVE MARKETS-Luxury: China virus stings hard, $50 bln wiped off

Mon 27th January, 2020 9:32am
* European shares open down sharply on China virus worries * Miners, luxury, airlines lead sectoral fallers * Italian banks rise as regional vote brings relief Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your thoughts on market moves: LUXURY: CHINA VIRUS STINGS HARD, $50 BLN WIPED OFF (0925 GMT) It's not surprising to see more than 95% of the STOXX 600 .STOXX constituents in red this morning as China's spreading virus outbreak is taking a toll on stocks ranging from miners to perfume makers. Bernstein analysts say Chinese consumers had spent $149 billion during the new year's week last year and that's likely to take a big hit this year due to travel curbs. The jolt is immediately felt in the top luxury names in Europe with nearly $50 billion wiped off from their market value since the outbreak. LVMH LVMH.PA , Kering PRTP.PA , L'Oreal OREP.PA , Burberry BRBY.L , Hermes HRMS.PA , among others, were all trading at multi-year/record highs before the virus broke out. "Markets had been vulnerable to an eventual correction given signs of exuberance such as strong price momentum, high valuations and overweight positioning, but a pandemic is rarely on anyone’s list of negative catalysts...," JPM's John Normand says. Comparing it to the 2002-03 SARs may not be the best way to weigh the impact of virus spread as Bernstein says Chinese nationals accounted for just 2% of the global luxury goods market in 2003 versus a whopping 35% in 2019. (Thyagaraju Adinarayan) ***** POSTCARD FROM ITALY (0924 GMT) Clouds may be darkening on markets this morning on the growing China virus scare but it looks the sun is shining over Italy. Milan stocks are outperforming and the FTSE MIB .FTMIB even managed to rise slightly at one point. Even though further turbulence down the road is not ruled out, the outcome of local elections over the weekend has eased worries over a snap election which, some fear, could hand power to anti-immigrant and anti-EU right-wing leader Matteo Salvini.*:nL8N29W0MU Here are a few views: UniCredit: "We expect the center-left victory in Emilia Romagna to help ease some pressure within the ruling coalition and provide some support to government action in the coming months". Barclays: "With the centre-left win in Emilia-Romagna, the risk of a government crisis in the short term has receded somewhat, yet many hurdles persist: the future nature of the coalition with a fractured M5S, the thin majority in the Senate, the regional and referendum votes further into 2020 (among others)". Citi: "Following the regional elections, we believe that a country risk stabilization in the short-term is now more likely". Italian banks .FTIT8300 , which are highly sensitive to local politics because of their big holdings of sovereign bonds, are up 1.1%. Poste Italiane PST.MI , which also has a large government bond portfolio, is the top gainer on the STOXX .STOXX . (Danilo Masoni) ***** OPENING SNAPSHOT: CHINA-EXPOSED SECTORS UNDER PRESSURE (0841 GMT) European stock exchanges opened in negative territory with mining, airlines and luxury companies suffering the most as China coronavirus death toll climbs to 80. The China-sensitive mining sector .SXPP is down 3.4% and travel & leisure index .SXTP is 2.2% lower as investors are growing anxious about the new virus. Despite the week-long holiday to celebrate the Chinese new year, investors are concerned people will avoid travelling. Hotel group Accor ACCP.PA is the worst performer of the French index .FCHI and airlines Lufthansa LHAG.DE , Fraport FRAG.DE , Easyjet EZJ.L , Air France- KLM AIRF.PA and Ryanair RYA.I are all lower between 4 and 5.8% in the early minutes of trading. In the heavily Asia-exposed luxury space, Burberry BRBY.L , Christian Dior DIOR.PA and LVMH LVMH.PA are also feeling the heat of the spreading virus outbreak. Here is a snapshot of the European bourses: (Joice Alves) ***** ON OUR RADAR: LUXURY AND AIRLINES (0759 GMT) Futures point to a lower start of the week for European bourses as investors are growing anxious about the economic impact of China's spreading virus outbreak. Traders are seeing European airlines and luxury stocks opening down 1-2%, while China-exposed miners should come under pressure too. There will also be some results to digest: Traders are seeing Landis+Gyr Group LANDI.S down 3-3.5% after company confirmed FY 2019 guidance at lower end of all ranges.*:nFWN29T0WF Petra Diamonds PDL.L 1H revenue fell 6%, dented by lower prices as the diamond industry grappled with soft demand from China because of the trade war with the U.S. and the anti-government protests in Hong Kong.*:nL4N29W0MC In the retail space, one trader is seeing H&M HMb.ST down 1% after it said on Saturday that data security breaches found at its German unit were unacceptable and it was cooperating with authority. [nL8N29U0FA} Reuters reported that a Swuss regulator probes board role in Credit Suisse CSGN.S spying scandal, as the spying debacle risks tipping the bank into a crisis that could engulf its top executives.*:nL8N29U0G2 In terms of M&A, Swiss food giant Nestle NESN.S bought Allergan's AGN.N medical nutrition business Zenpep.*:nL8N29W0MD And the founder of British subprime lender Amigo AMGO.L is putting his 60.6% stake of the company on the block. Amigo is seen 5% lower this morning.*:nFWN29U03H (Joice Alves) **** EUROPEAN STOCKS SEEN LOWER (0642 GMT) Bourses in Europe are expected to open lower imitating Asian markets as investors are growing increasingly worried about the economic impact of China's spreading virus outbreak. Last week, investors took some relief when the World Health Organisation said the coronavirus outbreak was an emergency in China but not yet a global one. But they are now getting more anxious as more cases add on.*:nRTV4krzFb Back in Europe, investors will have a week long of political events to digest: Yesterday, Italy's right-wing leader Matteo Salvini failed in his effort to overturn decades of leftist rule in Emilia-Romagna, one of Italy's richest regions, home for Ferrari luxury cars.*:nL8N29W01M Later this week, Britain is due to leave the EU and said it will set out more details about its objectives for a free trade deal with the European Union after the country leaves the bloc on Friday.*:nL8N29V07A Taking all into consideration, financial spreadbetters at IG expect London's FTSE to open 75 points lower at 7,585, Frankfurt's DAX to open 164 points lower at 13,576 and Paris' CAC to open 75 points lower at 6,028. (Joice Alves) ***** ​ <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ hhahahh Luxury stocks ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)
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