LVMH-Related Weakness Sees Luxury Retailers Leading STOXX Lower

The Euro STOXX 50 struggles with consumer discretionary leading the way lower on a sectoral basis after LVMH provided their latest quarterly earnings update after hours on Tuesday. The luxury retailer flagged some worry re: a slowdown in U.S. demand. This comes in the wake of some of the company’s rivals flagged similar concerns.

• Utilities buck the trend, providing the only move high within the major sectors.
• A lack of a follow through bid in Chinese equities (after Tuesday’s Politburo-inspired rally) will also have weighed on sentiment.
• Mixed U.S. big tech earnings will also have provided some impulse, with IT and communications around the middle of the pack, in line to a touch softer vs. the benchmark index from a top line sectoral performance perspective.
• The Euro STOXX 50 cash index is 1.2% lower on the day, while the futures equivalent is 55-60 points softer.
• Note that the index has found a bit of base just below previously outlined technical support in the form of the 50-day EMA. Our technical analyst has noted that the contract remains in consolidation mode, continuing to trade closer to the recent highs. Attention is on key resistance and the bull trigger at 4,447.00, the Jul 3 high. Clearance of this level would confirm a resumption of the uptrend. Key support and the bear trigger has been defined at 4,220.00, the Jul 7 low.