Wall Street sends in bearish research reports, causing luxury stocks leading the European stock market to falter.

More and more Wall Street investment institutions have downgraded the ratings of European luxury stocks that have been leading the European stock market for a long time. Bank of America has become the latest Wall Street giant to issue a bearish warning for the luxury goods industry in demand crisis. BofA's analysis team downgraded the rating of the luxury goods industry leader, LVMH, to "neutral," and also downgraded the stock ratings of other European luxury giants, including the parent company of Gucci, Kering Group. "We now consider that the revenue growth of the luxury goods industry will see a longer period of slowdown or decline, which may further pressure on profit margins." The Bank of America analysis team led by analyst Ashley Wallace wrote in a report, adding that this pessimistic scenario may persist until the second half of this year and even throughout 2025, meaning that the trend of luxury stocks, which have long led European stocks to record highs, may long be mired in a downturn. Once considered the "Magnificent 7" of European stock markets, the seven luxury giants now see their stock prices decline along with the slump in luxury goods consumption. Over the past few months, European luxury giants that previously crossed the 2022 global stock market bear market unscathed have collectively evaporated billions of dollars in market value, suffering heavy losses. Kering SA and Hugo Boss AG have suffered the largest market value losses, with their market capitalization shrinking by nearly half in the past year. In addition to LVMH, the Bank of America analysis team also downgraded Kering SA to "neutral" and downgraded the stock rating of Hugo Boss AG to "underperform the market," significantly lowering the target prices for European luxury stocks, which largely led to the stock prices of these three luxury giants falling in early European trading on Monday. LVMH's stock price fell 1.7%, while another luxury giant, Hermes, fell 1.8%, and France's benchmark stock index, the CAC 40 index, underperformed the broader European benchmark index. Asia, as the most important market for high-end luxury product manufacturers, is receiving increasing attention from investors as the region's economic growth slows down, which is one of the reasons why Wall Street giants, including Bank of America, have downgraded their ratings and target prices for European luxury stocks. Before Bank of America released this bearish research report on European luxury stocks, two other major Wall Street investment banks, Goldman Sachs and Jefferies International Ltd., warned that due to weak global demand for luxury goods, the profits of European luxury giants will further decline significantly. Year to date, a benchmark index tracking stocks in this industry has plummeted by over 13%, whereas the MSCI Europe benchmark stock index has risen by more than 7% year to date. The Bank of America analysis team, led by analyst Wallace, stated that luxury companies need to refocus on creativity, innovative fashion content, and stylistic novelty to drive sales, and pointed out that luxury brands that have launched new fashionable styles this year have regained momentum in performance growth.