Main U.S. indexes dip at open: DJI off ~0.5%
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Energy weakest S&P 500 sector; tech sole gainer
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Euro STOXX 600 index declines ~0.5%
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Dollar, gold edge up; bitcoin gains; crude falls >2%
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U.S. 10-Year Treasury yield edges down to ~3.55%
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THE CASE FOR AN ITALIAN LUXURY CHAMPION (0923 EDT/1323 GMT)
In luxury, big is better. Take LVMH which has seen its market cap rise seven fold over the last decade to become Europe's biggest company by market value.
But it's not only LVMH, or just a matter of market cap.
"Over the past ten years, luxury conglomerates have outperformed their mono-brand competitors on most metrics: taken together, LVMH, Richemont and Kering revenues grew twice as fast, margins expanded 10ppt more, and share prices outperformed by >200%," BofA Global Research says.
So, based on that, the U.S. bank is floating the idea of an Italian luxury champion reaping the benefits of larger scale, whereas now mono-brands are the rule.
"Overall, we think organic growth will, and should, remain the priority for these Italian groups. However, given the very strong brand momentum and financial performance some Italian groups currently experience, and the clear advantages multi-brand groups come with, inorganic growth and combinations could now be considered again," write BofA analysts.
"It is also interesting to note that several family-owned Italian luxury groups are in a management transition phase, with a new generation of the family taking more important responsibilities - which could lead to changes in growth strategy and cooperation," they add.
The market cap of LVMH, Kering and Richemont combined is up over 250% since 2014, while the Italian names - Prada, Moncler, Cucinelli and Ferragamo - have grown less than 50%, per BofA.
(Danilo Masoni)
NASDAQ COMPOSITE: ONE TOUGH CEILING (0900 EDT/1300 GMT)
Like the S&P 500 index, the Nasdaq Composite is bumping up against levels that have proven to be especially strong resistance:
In September of last year, the Composite put in a high at 12,270.189. After hitting new lows later in the year, the IXIC then rallied into an early February 2023 high at 12,269.555.
Thus, the Composite stalled less than one point from its September high, before then suffering another sharp setback into mid-March.
A subsequent recovery continues to be capped by the September 2022 high.
Over the past five weeks or so, strength has continued to peter out on an approach of the September ceiling. The weekly highs have been 12,228, 12,225, 12,206, 12,245, and 12,228. On Monday, the Composite's high was at 12,261.318 before it settled back to end at 12,212.598.
Given that this week will bring the results of a critical FOMC meeting, Apple's quarterly results and the latest non-farm payroll report, traders will be focused on whether the Composite can break through the ceiling, potentially clearing the way for further gains, or if it will once again fail, putting the index at risk for another downdraft.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)