HSBC Downgrades LVMH and Burberry, Warns European Luxury Stocks Face Tough Second Half

HSBC issued a sweeping downgrade of European luxury stocks on Wednesday, warning that the second half of 2026 looks harder to navigate for the sector. The bank downgraded LVMH and cut its rating on Burberry from buy to hold, while also slashing its price target on Hermes to EUR 1,650 from EUR 1,870. HSBC cited soft luxury momentum, muted near-term demand trends, and conditions likely to limit investor appetite across the sector for the rest of the year.

Burberry shares fell 3% to 1,052p in London trading following the downgrade, reflecting the market's swift reaction to HSBC's more cautious stance. The bank predicted a challenging second half broadly for European luxury goods stocks, underscoring concerns that conditions are unlikely to improve soon.

Separately, HSBC confirmed it is winding down its transaction services business in Germany, a move that will result in more than 300 job reductions. The bank also announced plans to redeem CHF 300 million in notes due 2027 in November. Meanwhile, HSBC joined Barclays and analyst Tom Lee in a bullish chorus on U.S. equities, with rising S&P 500 price targets underpinned by optimism around artificial intelligence and earnings growth.