Luxury stocks spike on proposed U.S.-Iran peace deal; LVMH up 5%
Luxury stocks rose sharply after the Iran-US agreement envisaged the reopening of the Strait of Hormuz and the lifting of US oil sanctions, according to Iranian state media on Friday.
shares LVMHowner of Gucci KeringAnd hermes increased by approximately 5%. swiss group richemont increased by approximately 3.4%, while the pan-European Stoxx 600 the index increased by 1.8%.
Luxury stocks have been hit hard by the Iran war, as the Middle East is a fast-growing market for an otherwise largely quiet sector. The war broke out in late February, just as the industry was beginning to show signs of recovery after a years-long slump driven by weak demand from Chinese consumers, formerly one of the industry’s main growth drivers.
Although the region accounts for an average single-digit percentage of total sales, the war has put pressure on sales for many luxury brands.
Analysts noted that revenue risk comes not only from reduced activity in the region, but also from reduced tourist flows and being affected by the so-called “feel-good factor” in which consumers reduce discretionary spending due to a gloomier economic outlook.
In April, LVMH cited the 1% negative impact caused by the Iran war in the previous quarter, halving quarterly organic growth as the conflict overshadowed underlying improvements.
The following week, CEO Bernard Arnault warned of a “world catastrophe” if the conflict in the Middle East was not resolved, which he said could lead to a serious negative impact on the world economy.
Luxury stocks crashed amid Iran war.
The interim peace agreement between the United States and Iran includes Iran’s commitment to reopen the Strait of Hormuz. The effective closure of the narrow waterway, which normally carries about a fifth of the world’s oil supply, has had global economic consequences, with energy prices soaring and inflation soaring.
The 14-article memorandum of understanding is subject to finalization.
President Donald Trump said in a social media post on Thursday that the United States had “reached a major agreement on the war” but warned that this depended on “finalizing the documents.”
