There may be less than two weeks until Christmas, traditionally a time for big-money spending, but luxury stocks are still out of fashion.
That's according to bankers at JP Morgan, who have warned investors to stay away from companies such as Burberry, LVMH and Kering.
“Too early to chase luxury, stick to sports,” the investment bank told clients, just weeks after HSBC published a gloomy report warning that three years of stellar growth for the sector were coming to an end.
While analysts remain optimistic about the long-term prospects, they warned of little growth in 2024 due to economic uncertainty in China, Europe and the US, which is heading into its election year.
JP Morgan cut its rating on Burberry, sending the shares down 1.3 percent (or 19.5p) to 1493.5p, on concerns the fashion house could struggle in the short term as consumer appetite follows years would decrease.
Dumped: despite less than two weeks until Christmas Bankers at JP Morgan have warned investors to stay away from luxury goods companies such as Burberry, LVMH and Kering
LVMH, the French owner of Louis Vutton, Dior and Fendi, and Gucci owner Kering were also in the line of fire.
Kering fell 0.4 percent (€ 1.45) to € 409, but LVMH rose 0.1 percent (€ 0.9) to € 734.5.
The FTSE 100 rose 0.08 percent, or 5.67 points, to 7,548.44 and the FTSE 250 rose 0.18 percent, or 33.64 points, to 18,695.76.
Fears of a recession increased in Britain after the economy shrank unexpectedly in October.
On the other side of the Atlantic, the US Fed kept interest rates at 5.5 percent.
Back in London, B&M fell 6.3 percent, or 37.6p, to 562.8p after one of the discount retailer's biggest shareholders cut its stake.
SSA Investments has raised £162 million by selling 27.8 million shares, but will still own around 3.4 percent of B&M.
Aston Martin slipped off course amid concerns about the luxury car maker's ability to smoothly launch new sports cars.
The FTSE 250 company is gearing up to launch and ramp up several models.
But HSBC said it faces a “difficult task” in regaining confidence after recent problems with the supply of its new DB12 sports car.
Analysts at the bank described the company as a “mixed bag with significant potential” that “needs to regain confidence as it has struggled to achieve its promised targets.”
HSBC said the luxury car maker is at risk of missing its forecasts for this year and downgraded its rating on the stock. Aston fell 8.9 percent, or 20.4 cents, to 208.6 cents.
Extraction fan manufacturer Volution rose 3.5 per cent, or 13.8p, to 412p, after raising its full-year forecasts following a strong start to the new financial year, when sales rose 8 per cent to £121 in the four months to the end of November million.
Petra Diamonds is nearing the sale of one of its mines – Koffiefontein – in South Africa.
The group has been investigating the possibility of finishing the location since April last year and will dismantle it if the sale does not go through.
Shares rose 1 percent, or 0.5p, to 50.5p yesterday.
Government contractor Capita signed a ten-year contract worth £34 million with Ireland's National Transport Authority.
The group, which also manages London's congestion charge and collects the BBC license fee, will provide customer contact and information services for commuters. It rose 3 percent, or 0.6p, to 20.74p.
Chapel Down led the way after founder Frazer Thompson, who led Britain's largest winemaker for 20 years until September 2021, acquired a 4 percent stake after it made its debut on AIM last week, having previously been listed on the Aquis Stock Exchange. .
Shares rose 19.2 percent, or 12.5p, to 77.5p.
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