Luxury stocks rise on Middle East peace hopes

Investing.com -- Shares in European luxury goods companies have gained for a second consecutive session on Thursday, as growing optimism over a potential resolution to the Middle East conflict lifted the outlook for international travel and high-end consumer spending.

Hermès, Kering, LVMH, Richemont, Moncler, and Burberry have all posted gains of between 1.7% and 3.1%, while Swatch jumped more than 7%, putting the Swiss watchmaker on track for its best single-day performance since January.

The rally reflects the sector's sensitivity to geopolitical conditions, with luxury goods companies among the biggest beneficiaries of a potential easing in Middle East tensions.

The conflict, which has kept the Strait of Hormuz largely closed since April, has weighed on global travel flows and dampened consumer sentiment in key Gulf markets that represent a significant source of high-net-worth spending for European luxury brands.

A resolution would also ease pressure on energy prices, which have remained elevated since the outbreak of hostilities and have acted as a broader drag on discretionary spending across Europe and Asia.

The luxury sector had already been navigating a challenging environment heading into the conflict, with slowing demand in China and cautious consumers in Europe weighing on growth expectations.

Peace hopes have injected fresh momentum into a group of stocks that had underperformed broader European equity markets in recent months.

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