DE30: LVMH and other fashion companies under selling pressure📉

• European markets extend upward trend
• Fashion companies under pressure from LVMH (MC.FR) quarterly results

Overall market situation:
Wednesday's trading session on European markets brings a continuation of the rallies, which, however, are somewhat more limited in scope. Investors' attention is primarily focused on the stocks of fashion companies. Moreover, at the end of today's session in the US, we will learn the Fed Minutes report, which will indicate how Fed policymakers voted during the last FOMC meeting. 

Wednesday's session on European stock markets brings increases in most companies, however, their scale and proportion to the broad market has clearly declined. The biggest declines are in fashion stocks, which are reacting to LVMH's (MC.FR) quarterly results. Source: xStation 5

Futures based on Germany's DE30 index are trading near 0.3% gains intraday. The benchmark is currently breaking out above the resistance zone set by the 200-day exponential moving average (golden curve). Source: xStation 5

News:

Investors' attention during today's session is focused on LVMH (MC.FR) shares, which are losing nearly 6% after the release of Q3 2023 results. 

Here are the key details of the results:

Almost all of LVMH's business segments showed weaker year-over-year revenue growth relative to investors' expectations. Source: Bloomberg Finance L.P.

Percentage surprise on the downside from results reported by LVMH. Source: Bloomberg Finance L.P.

Surprise relative to the consensus of analysts surveyed by Bloomberg regarding the geographic distribution of sales. Source: Bloomberg Finance L.P.

Historical sales performance by world region (with forecasts for Q4 and Q1 2024).

Source: LVMH

Comments from investors (investment funds) and analysts following the results

• Profit warnings are expected in the alcoholic beverages sector.
• Morgan Stanley (overweight) - Overall, although today's lower results are not exceptionally significant, and market expectations have been lowered in recent weeks, today's release will nonetheless be viewed negatively for LVMH and the broader luxury goods sector
• The outlook for 2024 remains uncertain, and the negative earnings revisions are likely not over yet, the lack of revenue is likely to increase pressure on the broader luxury sector in the near term. The key fashion and leather division missed expectations for the first time in many years, wrote analysts led by Piral Dadhania at RBC (outperform). 
• Analysts are negative on the "poor" commentary on future forecasts. 
• A major negative factor creating lower results was the impact of the FX market.  The nearly 8% unfavorable impact of FX in Q3 is likely to extend into Q4. (Bloomberg median expectations, however, do not assume this for the next quarter)

Impact of FX changes on the company's results. Source: Bloomberg Finance L.P.
Germany announces a new €1 billion air defense package for Ukraine, including an additional Patriot system to help protect critical infrastructure. The German government will also provide the IRIS-T air defense system, 10 Leopard A1 tanks and 3 Gepard self-propelled anti-aircraft guns.

Analyst recommendations:

• Siltronic upgraded to "buy" rating by Citi. Target price at 105 euros.
• Hapag-Lloyd downgraded to "sell" rating by Deutsche Bank. Target price at 91 euros.
• Rheimentall rated "overweight" by Barclays. Target price at 300 euros.