Before the bell: Chinese steamer unstoppable

There are also gains in Chinese stock markets this morning. Luxury buys luxury and unknown is not unloved.

The Bel20 rose half a percent yesterday. The Euro Stoxx 50 even climbed 2.4%. Chinese support measures have been propelling share prices in sectors sensitive to the Chinese economy for several days. Luxury goods, for example. LVMH, Bernard Arnault’s luxury group, gained almost 10% yesterday. But Kering (+9.6%) and Hermès (+9.1%) also experienced a luxury day. Cosmetics companies Estée Lauder (+10%) and L’Oréal (+7%) also benefited. These are not “ordinary” stock market days and such performance cannot be repeated all the time. But remember that those stocks had also fallen sharply due to exaggerated pessimism about the Chinese economy and consumer. Not only was money made in and around China yesterday, Micron Technology shareholders (+14.7%) also got to join the banquet. The stock gained wings thanks to its connection with AI. In the commodity markets, the price of oil went down again. In a way, this is also good news, at least for motorists still driving combustion engine cars. Some nasty gossips claim that the price of black gold is falling because of an approaching recession, but the price drop is also a result of higher oil production in Saudi Arabia.

Asian markets are also on gains this morning. In Japan, the Nikkei is up 0.9% and the Topix is unchanged. In Hong Kong, the Hang Seng index is up 3.5%. Alibaba is already gaining 6% this morning. In our region, Biobest holding Floridienne is still coming out with half-year results. We will also soon get the inflation figure for September. In the US, the inflation figure for August will be published and the University of Michigan will give us the state of consumer confidence.

Under the radar

Circuit board maker Jabil Circuit posted revenue of $7 billion in the fourth quarter of its broken fiscal year. That’s more than the $6.7 billion that analysts had expected. Earnings of $2.3 per share also exceeded expectations. The board also announced a $1 billion buyback of its own shares. Investors applauded and sent the share price 11.6% higher. Just a year ago, the company sold its production facilities for cell phone components to Chinese automaker BYD for $2.2 billion. The lesser-known Jabil Circuit operates under the radar, manufacturing electronic equipment for several large customers including Cisco Systems, Philips and Apple. 

Luxury buys luxury

Due to slower growth in China, luxury stocks limped along behind for a while. That tide has turned considerably over the past week, since China is looking to rekindle growth at all costs. Even the king of luxury, Bernard Arnault, still believes in the sector. Last night it was announced that his luxury holding company LVMH is taking a 10% stake in the investment vehicle ‘Double R’ of Remo Ruffini, the CEO of luxury coat manufacturer Moncler. LVMH may raise that investment to 22%, which in turn will allow ‘Double R’ to strengthen its grip on Moncler.

Did you know…

Janet Yellen, US Treasury Secretary and former chairman of the US central bank, and Ben Bernanke, also former Fed chairman, are both convinced that the US economy will avoid a recession?

This article was translated from Dutch and was originally published on Spaarvarkens.be.