| Over in Europe, where investors are bracing for another gloomy results season from the luxury-goods industry, there's potentially one bright spot — China's stimulus blitz, which could prompt companies to signal that earnings are approaching the bottom.
LVMH, Europe's second-largest company by market value, reports sales after the close today. Investors are likely to look past the numbers and focus instead on whether executives will flag any uptick in Chinese spending since late September, when Beijing started unleashing stimulus to boost its economy. (The head of Australia's biggest pension fund says China's boom times are over.) Stakes are high, and not just for LVMH. The Christian Dior owner has lost more than a quarter of its market cap from a March peak, and a Goldman index of luxury stocks has shed more than $200 billion in value over that period, as investors questioned whether Chinese shoppers would ever regain their appetite for pricey handbags and clothing. Companies such as Kering, Burberry and Hugo Boss issued profit warnings this year, so expectations are low — earnings estimates for the next year have fallen by 10%. Still, the turnaround is unlikely to be swift: During this year's Golden Week holiday, Chinese citizens spent less than before the pandemic. While Beijing's moves come too late for third-quarter results, any upbeat commentary from LVMH could offer some relief to the entire complex, and could even lift sentiment on the broader European stock market. Overall, earnings reports will be "challenging" across the sector, said Florian Ielpo, head of macro research at Lombard Odier Asset Management. Still, he's "placing a lot of hope in the forward guidance we get from all of those companies, because they'll be the first witnessing whether the stimulus is working or not." — Kit Rees | 
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