Shares of luxury brands soar on news of US-Iran agreement

Shares of luxury goods producers jumped on Friday, June 12, after Iranian media published a draft peace agreement between Iran and the U.S., which outlined the opening of the Strait of Hormuz and the lifting of U.S. oil sanctions, CNBC wrote.

The shares of LVMH, the owner of Gucci brand Kering, as well as Hermes rose by about 5%. The capitalization of the Swiss group Richemont increased by 3.6%, while the pan-European index Stoxx 600 added 1.8%.

The luxury sector has been hit hard by the war in the Middle East, as the region was one of the few fast-growing markets for an industry that has been stagnant of late, CNBC notes. The hostilities began in late February, just as the luxury sector was showing signs of recovery from years of decline caused by weak demand from Chinese consumers (who were one of the sector's main growth drivers). On average, the Middle East region accounts for only a small percentage of total sales, the channel said.

The conflict in the Middle East reduced LVMH's organic revenue growth in the first quarter by approximately 1 percentage point. The war also had a negative impact on Kering's total sales of approximately 1 percentage point. The company's revenue fell 6 percent in the first quarter versus the same period last year. Hermès sales in the region, which includes the Middle East, were down 5.9% in the first three months of 2026 compared with the same period last year, while revenue in France, a key tourist destination, fell 2.8% amid lower spending by tourists.

Analysts emphasize that the risks to luxury sector revenues lie not only in weak activity in the Middle East region itself amid the war, but also in declining tourist flows, as well as - a drop in the so-called "feel-good factor", when consumers reduce optional spending amid a gloomier economic outlook.

18 of 27 analysts covering LVMH stock advise buying it. Nine recommend holding the securities in their portfolio.

The Wall Street consensus on shares of Gucci owner Kering is neutral, with most analysts advising them to hold (17 out of 24).

14 out of 22 analysts following Hermes stock advise buying the luxury group's shares. Seven recommend holding and only one recommends selling.

The tentative peace agreement between the United States and Iran, reported by Iran's Mehr news agency on June 12, includes a commitment by Tehran to resume shipping in the Strait of Hormuz. The virtual closure of this narrow waterway, through which about one-fifth of the world's oil supply normally passes, has had global economic repercussions, triggering a surge in energy prices and a spike in inflation. In all, the parties' memorandum of understanding, consists of 14 points. Bloomberg, citing unnamed senior officials, writes that the U.S. and Iran may sign the deal as early as this week, ahead of the G7 leaders' meeting.

This article was AI-translated and verified by a human editor