Shares of luxury goods companies moved lower on Monday after Morgan Stanley analysts warned that escalating conflict involving Iran could weigh on consumer spending sentiment across the Middle East.
In Paris, shares of Louis Vuitton owner LVMH (EU:MC) fell more than 3%, while Gucci parent Kering (EU:KER) dropped 4.3%. Switzerland-listed Richemont (TG:RITN) declined over 6%, and UK luxury brand Burberry (LSE:BRBY) lost around 4%. Sports car maker Ferrari (BIT:RACE) also slipped 3.8% in U.S. premarket trading.
In a research note, Morgan Stanley analysts estimated that the Middle East accounts for roughly 5% of total sales for most luxury companies, with the United Arab Emirates representing the largest individual market within the region.
They added that spending in the Middle East typically accelerates toward the latter part of the Ramadan holy month, particularly in the run-up to Eid al-Fitr, which this year falls on March 19 and 20. However, the recent outbreak of violence could dampen luxury purchases during this key seasonal period — often referred to as the “Ramadan rush” — according to analysts including Natasha Bonnet and Edouard Aubin.
On Saturday, the United States and Israel announced coordinated strikes targeting multiple locations in Iran, resulting in the deaths of several senior Iranian officials, including Supreme Leader Ayatollah Ali Khamenei. U.S. President Donald Trump called on Iranian opposition groups to overthrow the country’s long-standing political system, although many senior U.S. officials remain doubtful that regime change is imminent, Reuters reported.
Questions also remain over how long Washington intends to remain involved in the conflict. Trump told the New York Times that military operations could continue for “four to five weeks.” He also declined to outline how a political transition in Iran might unfold, saying he has “three very good choices” but “won’t be revealing them now,” according to the New York Times.
The strikes prompted retaliatory actions by Tehran targeting locations across the Middle East, including several energy-producing Gulf nations.
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