Shares in LVMH declined on Wednesday after the owner of the luxury goods company – whose offerings include Louis Vuitton handbags, Moet & Chandon Champagne and Christian Dior gown – had $11.2bn (£9.05bn) wiped from his fortune in one day over concerns that a softening US economy will dampen demand.
Bernard Arnault, the world’s richest person, had seen his wealth surge for most of 2023 as share prices of European luxury companies surged. However, on Tuesday, LVMH stock fell 5% in Paris – the most in more than a year – and shares were down nearly 2% on Wednesday.
However, even with traders selling shares in the group, the French billionaire still has a net worth of $191.6bn, according to the Bloomberg Billionaires Index.
Moreover, LVMH’s share price is still up 23% for the year, despite its stock declining this week.
Energy company SSE was one of the top risers on the FTSE 100 index on Wednesday after it reported a near-doubling of its annual profits compared with the year before as a result of soaring energy prices.
The Scotland-based group said its adjusted pre-tax profits rose to £2.18bn for the 12 months to the end of March, up from almost £1.16bn the year before.
SSE also announced plans to invest up to £40bn in low-carbon energy infrastructure.
“SSE knows the drill – an energy company reporting bumper profit is likely to draw fire right now as UK households continue to struggle with the cost of heating and lighting their homes,” Russ Mould, investment director at AJ Bell, said.
That’s why, Mould pointed out, the company is so keen to emphasise plans for tens of billions of pounds worth of investment in green energy projects and to point out it has put aside a not insignificant sum to satisfy existing windfall taxes.
“SSE’s spending commitment is undoubtedly eye-catching and is good news for a government which has often attracted criticism for not doing enough to promote investment in areas like wind and solar compared with the EU and US.
“Profit with a purpose is a good soundbite, but shareholders will want to see evidence that they are being rewarded for funding the company too,” Mould added.
Shares in retailer M&S jumped nearly 12% on Wednesday as investors seemed encouraged by the company’s full year 2023 results.
M&S said its sales rose by 10% although inflationary pressures and the absence of UK business rates relief saw lower margins, with adjusted operating profit down 12%. Clothing and home sales grew 11%, however, and food also grew, by 9%.
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said the group has made a good start to the new financial year as it plans to also reinstate a modest dividend.
“In a difficult trading environment M&S has delivered solid results, with notable progress in clothing and home. With the new year having got off to a good start and plans to reinstate dividends, the turnaround plan to revitalise the brand and reignite growth appears on track.
“The clothing and home division has been a problem child for M&S for many years. The new strategy, launched last year, aims to improve brand perception and designs, reduce discounting and improve the online offering, while taking a knife to costs and instilling a more entrepreneurial culture. Early signs are this plan is resonating with consumers with M&S increasing its market share in clothing and footwear during the year,” Huggins added.
He also noted that it was too early for M&S to declare victory, however.
“M&S shareholders are all too aware that one swallow doesn't make a summer. M&S needs to sustain growth in sales and get margins moving in the right direction. This will be difficult given a backdrop of intense cost pressures. Nevertheless, there are more reasons for optimism now than there have been for some time."
Kingfisher Plc (KGF.L)
Shares fell around 2% in Kingfishers Plc in morning trade after the group reported first quarter sales of £3.3bn, an increase of 8%, but down 2% on a constant currency basis.
The home improvement retailer also reiterated its full-year guidance on Wednesday and said it is on track with plans to reduce inventory levels this year.
“The owner of B&Q has suffered from cold and rainy weather conditions in the UK and France, negatively impacting sales of items like garden furniture and barbecues, which are typically purchased in the preparation months ahead of summer. However, CEO Thierry Garnier said it anticipates ‘a release of pent-up demand’ as weather conditions pick up,” Victoria Scholar, head of investment at Interactive Investor, said.
She also noted how Kingfisher successfully rode the stay-at-home wave during the pandemic, enjoying a surge in demand for DIY products as consumers felt particularly house proud when they were stuck at home during lockdowns.
“However the post-covid economic reopening has seen consumers substitute away from spending on home improvements towards travel, restaurants and other activities that were largely off limits in 2020 and 2021,” Scholar added.
On top of that, the analyst also highlighted, the macroeconomic pressures from rising costs, squeezed household budgets, and falling real wages have added to the consumer strain resulting in less spending in Kingfisher’s stores like Screwfix and Castorama in the UK and France respectively.
Traders will also be keeping across Nvidia stock ahead of its earnings release later.
The US technology company, known for driving advances in AI, HPC, gaming, creative design, autonomous vehicles, chipmaking, and robotics, has seen its shares rally more than 100% in 2023.
The company's stock has been leading the pack among well-known chip-makers: AMD (AMD) shares are up 63% on the year, Intel (INTC) has advanced 14%, and Qualcomm (QCOM) shares have actually lost 3.6%. The stock has also outperformed Apple's (AAPL) 35% appreciation.
Analysts are expecting the company to say revenue and net income shrank by as much as a fifth last quarter, which would put its stock rally to the test.
"Nvidia is trading on heroic valuations which time will tell if they are justified," Deutsche Bank strategist Jim Reid said in a client note on Monday.