Burberry Reports Higher Sales as China Demand Rebounds
Luxury British retailer Burberry has reported an 18% increase in sales revenue for the quarter ending July 1, signaling a rebound in demand from China. The company’s earnings season has begun on a positive note, with sales in Europe, the Middle East, India, and Africa also showing a 17% increase. However, the biggest successes came in Asia, with mainland China sales rising by an impressive 46%. South Asia-Pacific and Japan also saw significant growth, with sales up 39% and 44% respectively. The Americas, on the other hand, experienced an 8% decline in sales.
Burberry remains optimistic and has reiterated its full-year guidance. In addition, the company announced a £400 million share buyback, which is expected to be completed by the end of the calendar year. This move demonstrates Burberry’s confidence in its future performance and its commitment to returning value to shareholders.
The strong sales performance in China reflects the recovering luxury market in the region. As Chinese consumers regain confidence and purchasing power, they are increasingly seeking out high-end brands like Burberry. This trend aligns with the broader recovery of the Chinese economy, which has been supported by the country’s successful containment of the COVID-19 pandemic and implementation of stimulus measures.
Burberry’s positive sales results are a promising sign for the luxury retail sector and indicate a potential return to pre-pandemic levels of consumer spending. As global economies continue to recover, luxury brands are poised to benefit from increased demand, particularly from key markets such as China.
Chart: Burberry Share Price
Opening Calls: Europe Stocks to Open Lower
European stocks are expected to open lower on Friday, according to data from IG. The UK’s FTSE 100 is projected to fall by 15.5 points to 7,427, while Germany’s DAX is set to open 14.4 points lower at 16,130. France’s CAC 40 and Italy’s MIB are also expected to open lower by 13.8 and 26 points respectively.
The anticipated decline in European stocks reflects ongoing concerns over the global economic outlook. Various factors, including rising inflation and the potential for interest rate hikes, have contributed to market volatility in recent months. Investors will be closely watching economic indicators and central bank decisions for guidance on future market trends.
CNBC Pro: High-Yield Bond Fund Offers 10% in Dividends
A fixed-income fund offering 10% in dividends has attracted attention in the financial world. The fund manager behind this high-yield bond fund has predicted a “deterioration in credit” for the wider economy in the near future. However, the portfolio manager believes that the fund is well-positioned to navigate this scenario while generating market-beating income.
The fund is one of only a few available to retail investors across Europe that currently offers double-digit yields. This makes it an attractive option for income-seeking investors in a low-interest-rate environment. Subscribers to CNBC Pro can access more detailed information on this high-yield bond fund and its investment strategy.
Global Fintech Funding Plunges in First Half of 2023
Funding for fintech startups has dropped significantly in the first half of 2023, according to data from S&P Global Market Intelligence. The total funding amount declined by 49% globally to $23 billion compared to the same period last year. Deal counts also plunged by 64% in the first six months of 2023.
The decline in fintech funding reflects dampened investor risk appetite following the failure of Silicon Valley Bank in March. Mega funding rounds of over $100 million have become scarce, with only nine such deals occurring in the second quarter of 2023 compared to 55 in the same period last year.
Despite the challenges faced by the fintech sector, experts expect a recovery in the second half of 2023. Factors such as a stabilization of interest rates, a pickup in mergers and acquisitions, and a rebound in public market valuations of tech stocks are anticipated to drive improved funding conditions.
International Monetary Fund Highlights China’s Slowing Growth
The International Monetary Fund (IMF) has acknowledged a slowdown in China’s growth, attributing it to weaker private investment, declining exports, and reduced domestic demand. The IMF spokesperson, Julie Kozak, noted that growth momentum in China has been slowing recently, particularly due to below-expectations private investment. This comes after a strong performance in exports during the first quarter of the year.
The IMF’s outlook for China’s growth aligns with its previous forecasts and suggests a continued deceleration of the Chinese economy. An updated forecast for China will be included in the IMF’s next World Economic Outlook report.
Producer Price Index Rises Less Than Expected
The producer price index, which measures what wholesalers pay for goods, increased by only 0.1% in June. This was below the expectations of economists polled by Dow Jones, who had anticipated a 0.2% increase. Similarly, the core producer price index, which excludes food and energy prices, rose by just 0.1%, falling short of expectations.
The lower-than-expected increases in both indexes may indicate a moderation in inflationary pressures. However, economists will continue to monitor these indices and other inflation indicators to assess the overall direction of prices in the economy.
Australia Appoints Michele Bullock as New Central Bank Governor
Michele Bullock, the current deputy governor of the Reserve Bank of Australia (RBA), has been appointed as the new central bank chief. She will succeed Philip Lowe, whose 43-year term at the bank will end on August 17. Treasurer Jim Chalmers described Bullock’s appointment as striking “the optimal balance between providing exceptional experience & expertise and offering a fresh leadership perspective.”
Bullock’s appointment leaves a vacant deputy governor’s position at the RBA, which the Australian government plans to fill in the coming months. The change in leadership at the central bank comes at a critical time as Australia navigates the challenges of post-pandemic economic recovery.
Fed’s Waller Advocates for Two More Rate Hikes
Federal Reserve Board Governor Christopher Waller has emphasized the need for two more rate hikes to bring inflation down to the central bank’s target. Waller believes that an additional 50 basis points increase in the target range over the remaining four meetings this year is necessary to ensure that inflation continues to move towards the desired level.
While Waller acknowledged the recent cooling in the inflation rate, he cautioned against basing policy decisions on a single data point. He emphasized the importance of sustainable improvement in inflation before concluding that it has decelerated.
Bank of America Identifies AI Opportunities in Software Industry
Bank of America has recognized the “undeniably vast” opportunity presented by artificial intelligence (AI) in the software industry. The bank has ranked European companies in the sector and highlighted the potential for revenue uplift, enhanced value proposition, data monetization, and productivity improvements through the use of AI.
As gen AI (Generation AI) continues to grow and influence various industries, including software, companies are exploring ways to leverage AI technologies to stay competitive and meet customer demands. The adoption of AI offers opportunities for innovation and growth, making it a critical focus area for businesses.
S&P 500 Continues to Rise Amidst Rate Hikes
The S&P 500 has recorded a 3.3% increase since the Federal Reserve started raising interest rates in March 2022. This upward trend reflects the market’s optimism regarding the central bank’s ability to manage inflation without causing a recession. Investors remain hopeful that the Fed’s monetary policy actions will support economic growth while keeping inflation under control.
Goldman Sachs’ John Flood expressed confidence in the S&P 500’s potential to reach all-time highs before the end of the year. The positive performance of the index underscores the market’s resilience and suggests a favorable outlook for stocks in the near future.
Chart: S&P 500 Performance Since Fed Rate Hikes Began