There was a lot of global macro news released during the first full trading week of the year with the potential to impact the retail luxury and premium sector. The FSW All Markets Index is now up 4.5 percent on the year with 14 of the 18 index constituents gaining. The first wave of macro news this year points to a mix of head- and tail-winds for the industry
The biggest gainers have been Capri (up 17 percent) on rumors that Prada may purchase Versace from the struggling group, Moncler (up 7.6 percent) as extremely cold weather strikes across the U.S., and Brunello Cucinelli (up 5.7 percent) as the brand continues to go from strength to strength. Industry giant LVMH is up 4.6 percent so far this year.
Key macro news for luxury and premium market watchers this week included:
- Deflationary pressures in China continue as consumer prices in December were up 0.1 percent while producer prices fell for the 27th consecutive month. This is more bad news for the industry given the role that China has played in powering growth over the past decade. You can find our view and China forecasts here: https://www.fashionstrategyweekly.com/p/forecasting-the-future-of-luxury
- Interest rates in the U.S. may be holding steady in 2025. Minutes released by the Federal Reserve reflected a hawkish stance with no significant rate cuts expected this year. The yield on the U.S. 10-year note rose to 4.77 percent, signaling diminished expectations for further cuts that might help spur demand from U.S. aspirational consumers. Yet, countering this is a persistently strong labor market as the December jobs report saw 256,000 jobs added, blowing past expectations for 100,000. The unemployment rate fell to 4.1 percent.
- Consumer prices in the Eurozone rose 2.4 percent in December. This was in line with economists’ forecasts, yet expectations are becoming more mixed about ECB plans for 2025 rate cuts. The Euro is down over 1 percent to the U.S. dollar so far this year.
You can find the current annual FSW Markets luxury industry forecasts here: https://itsworkingtitle.com/what-lies-ahead-for-luxury-in-2025/