Luxury sector, the long crisis continues
Last Update: 27/12/2024
The latest shingle came from French luxury giant Lvmh, which reported a 3 percent drop in revenues in the third quarter 2024, its first minus sign since the start of the pandemic. The luxury sector continues to experience a phase of great uncertainty.
Underlying this complicated situation are the weakness of the main target market (China), rising prices, and, according to some, even a creeping change in consumer habits.
In the markets, the most emblematic snapshot of this situation is the one we present below. This is the relative strength ratio (RF) between the S&P Global Luxury index and the Global Equity.
We note the bearish trend (hence weakness in the luxury sector relative to global equities) starting in early 2023 and continuing to pierce the 52-week average. The jolt in late September, which brings the RF back above the one-year average, is a reaction to China’s announcement of economic stimulus. Euphoria quickly returned with the latest news mentioned above.
