July 25 to 29 | Black gold and luxury stocks: what to watch this week

Earnings season is back in full swing but investors are still cautious this summer thanks to a backdrop of inflation and monetary tightening by central banks. Moreover, this week we’ll get crucial GDP growth figures from Europe’s powerhouse economies, Germany and France. This will take the pulse of the overall economy and give us an insight into the impact of inflation.

Over on the stock market, however, we could see some sparks of life with several major earnings reports on the agenda. Ready to find out more? Let’s dive into the details!

The luxury industry: glittering results or fake gold?

Luxury stocks have seen a noticeable rise in the first weeks of July. Firstly, the drop in the euro has helped boost the sector as products are now cheaper to export to the US (an important market for the luxury industry).

In addition, luxury products are among the best-placed to ride out this period of inflation. As the financial director of a Danish bank, Christopher Dembik, explains, luxury companies can raise prices without their wealthy customers noticing too much. Finally, the end of Chinese Covid lockdowns has brought customers back to the luxury market.

So, which stocks to watch? This week, four French luxury companies will report their quarterly results.

  • LVMH on Tuesday July 26. The parent company of Louis Vuitton posted record profits in 2021, followed by a record first quarter in 2022 (€18 billion – an increase of 29% year-over-year). Analysts are expecting LVMH to post another strong quarter.
  • Christian Dior on Wednesday, July 27. Analysts also expect solid results for Christian Dior in terms of revenue and earnings-per-share (EPS). On average, the company’s EPS has increased 24% per year over the past three years!
  • L’Oréal on Thursday July 28. Like its rivals, L’Oreal posted impressive results for the 2021 financial year. The company is experiencing strong growth, boosted by several recent acquisitions. Some analysts, however, believe the stock is slightly overvalued.
  • Hermès on Friday July 29. Revenue at Hermès has increased from €2.8 billion in 2011 to almost €9 billion in 2021 with a 15% increase in net profit. In that same time period, Hermès shares have climbed nearly 300%! Results are expected to come in strong again for the latest quarter.

A green light for black gold?

If there’s one asset that traders and investors are watching more than any other, it’s oil. For months, the rising oil price has contributed to elevated inflation rates with a knock-on effect in almost all industries from air travel to manufacturing to family households. If you drive a car, you know how expensive it is to fill up with petrol!

Last week, French president Macron hosted Mohamed bin Zayed, President of the United Arab Emirates, to talk about the oil crisis. Joe Biden also made a trip to Saudi Arabia to address the problem. For the moment, however, OPEC (the Organization of the Petroleum Exporting Countries) does not wish to increase production, which doesn’t bode well for fuel prices. Keep watching this closely.

This week, four major oil companies will report their figures, including:

  • Shell and TotalEnergies on Thursday July 28
  • Chevron and ExxonMobil on Friday, July 29

Bloomberg explains that these oil companies are expected to report colossal profits. Shell could reveal a potential gain of $1 billion due to the increased margins at its refineries, where it transforms crude oil into fuels and chemicals. Similarly, the French company TotalEnergies said its refining activity had an exceptional performance during the last quarter.

Economic and earnings calendar

Monday – IFO Business Climate Index in Germany (July). Consumer confidence in Ireland (July). Results of Vodafone, Philips.

Tuesday – Results from Microsoft, Visa, LVMH, McDonald’s, Coca-Cola.

Wednesday – Consumer confidence in France (July). Unemployment rate in France (June). Loans to households and companies in the euro zone (June). Interest rate decision by the US Federal Reserve. Results from Meta Platforms, Qualcomm, Christian Dior.

Thursday – Unemployment rate in Spain (Q2). Economic, industrial and services sentiment in the euro zone (July). Inflation rate in Germany (July). GDP growth in the United States (Q2). US weekly unemployment figures. Results from Apple, Pfizer, Amazon, Merck & Co, L’Oréal, Shell.

Friday – GDP growth in France, Austria, Spain, Germany, Italy, and in the euro zone (Q2). Results of Exxon Mobil, Procter & Gamble, Chevron, Hermès.

We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!

The BUX Breakdown was written by Clémentine Pougnet.

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.