Luxury giants report declining revenues, shipping firms benefit from Red Sea attacks, tech stocks resilient.

From Morningstar: 2024-08-02 04:21:00

Second quarter earnings reports from luxury giants like LVMH, Burberry, and Kering reveal declining revenues and margins, signaling weakness in the luxury sector. Demand has waned, particularly in China, causing a bubble in luxury goods sales post-pandemic to burst, leading to unsustainable growth.

Shipping firms experience a boost in revenues due to attacks in the Red Sea, leading to a spike in freight rates as ships avoid the Suez Canal. Global logistics companies like DSV and Kuehne + Nagel benefit from increased volumes, stabilizing the industry in the face of excess capacity and declining profits.

Tech stocks remain resilient despite volatile share prices, with companies like SAP and ASML showing strong operational performance and earnings growth in Q2. While fears of overinvestment in AI and potential trade restrictions linger, the industry is expected to find a way to maintain profitability through innovation.

Industrial firms’ performance hinges on their end markets, as seen in Sandvik and ABB’s success in buoyant markets like Chinese mining and industrial electrification. However, companies like Schindler face setbacks due to downturns in the Chinese property market, highlighting the industry’s vulnerability to market fluctuations.



Read more at Morningstar: 4 Takeaways From Mid-Year Earnings Season