Luxury stocks fall amid Iran conflict
New York City.
Adam Gray | Reuters
Luxury stocks were among the worst-hit sectors early Tuesday, with European markets moving higher. Another day of loss The conflict in the Middle East intensified overnight.
Group Shares LVMHGucci-Owner dryand a British outerwear maker Burberry were among the worst performers, with week-to-date losses reaching 10% each. A broad European blue-chip index, Stocks 600It was down about 3% on Tuesday after falling 1.6% on Monday.
The Middle East is a growth driver in the region, which is battling a tough macroeconomic backdrop and many previously best-selling brands struggling to connect with consumers.
However, the region’s strength is not enough to offset weaknesses elsewhere, Especially in ChinaAnd industry giants like LVMH and Kering are still struggling to catch up Sales are back on a positive track.
“The Middle East is one of the few bright spots,” Morningstar analyst Jelena Sokolova told CNBC. “You have an area that was small, but it was very, very vibrant and now it’s having an impact.”
The US and Israel launched a wide-ranging attack on Iran over the weekend that killed the country’s supreme leader, Ayatollah Ali Khamenei. Iran responded with retaliatory strikes, and the conflict now spans the wider Middle East with no clear end point.
US President Donald Trump has said the war could last four to five weeks, but that “Much farther than that” can go.
shares of RichemontCartier’s owners, Van Cleef and Chloe, fell hard on Monday and Tuesday with relatively large displays in the region.
Luxury stocks fell as the US-Iran conflict escalated.
But even with Middle East revenue exposure averaging in the single digits for luxury brands, the effects could spill over if the struggle lasts weeks or months.
“If people don’t get back to normal, and we have more problems getting oil and gas from the Gulf, the potential for a global recession could increase, and that would certainly hurt discretionary sectors like luxury,” Bernstein analyst Luca Solka told CNBC.
If the war lasts another six months, then between Oil is significant disturbed“Then this is very bad news,” he added.
The ‘feel good’ factor
Luxury stocks come under pressure during periods of high geopolitical and economic uncertainty as demand typically requires a “feel-good” backdrop and robust consumer confidence, analysts say.
“Luxury demand is driven by positive consumer confidence and a constructive view of one’s future prospects, as well as a consumer experience that is often less transactional and more emotional,” RBC Capital Markets analysts wrote in a note to clients on Monday. “Conflict, shock, uncertainty and fear are not helpful in this context and may have a short-term impact on luxury demand.”
on Friday, February 20, 2026 at the Damac Heights Real Estate Development at Dubai Marina in Dubai, United Arab Emirates.
Bloomberg | Bloomberg | Getty Images
The impact on overall asset prices remains to be seen, but the movement so far suggests that a hit is expected, at least in the short term.
There is a great deal of uncertainty about the potential end of the conflict and when it will happen, Sokolova said, however, also calling the market’s reaction “overwhelming” given the relatively small sales volume from the region.
Disruption of travel
Attacks between the US, Israel and Iran in the region have forced airlines to shut down Cancel thousands of flights. Some airlines said on Monday they would resume a “limited number” of flights, with planes largely grounded as the conflict entered its fourth day.
The timing of the strike also coincides with Ramadan, meaning that post-Ramadan travel could be disrupted if clashes escalate. After the month-long observance, travel to the Middle East is mainly in Europe, RBC said.
“Given the timing of the Iran war conflict and the current grounding of commercial flights, Middle Eastern consumers may be reluctant to travel after Ramadan in 2026 which will negatively impact part of luxury consumption in Europe.”
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