Shares of prominent luxury goods companies tumbled on Monday amid concerns that recent U.S. and Israeli strikes on Iran could undermine consumer demand in the Middle East, particularly during the seasonal spike at the close of Ramadan.
Paris-listed LVMH, owner of Louis Vuitton, fell by more than 3% while Kering, the parent of Gucci, lost 4.3%. Swiss jeweller Richemont slid by over 6%, and Burberry in the United Kingdom dropped 4%. U.S. premarket trading also showed Ferrari down about 3.8%.
Analysts at Morgan Stanley said the Middle East represents roughly 5% of sales for most large luxury companies, with the United Arab Emirates typically the largest single market in the region. The bank cautioned that spending in the Middle East tends to concentrate late in the Ramadan period, culminating in purchases around Eid al-Fitr, which this year falls on March 19 and 20.
In a note, Morgan Stanley strategists Natasha Bonnet and Edouard Aubin said the outbreak of fresh violence across the region could curtail the so-called "Ramadan rush," potentially reducing the volume of sales that luxury brands rely on at this time of year.
The sentiment shift followed announcements that the U.S. and Israel carried out joint strikes on sites across Iran. Those strikes, reported on Saturday, resulted in the killing of several high-ranking Iranian personnel, including Supreme Leader Ayatollah Ali Khamenei. The operations and their aftermath have sparked broader uncertainty about the trajectory of regional tensions and the extent of Western involvement.
U.S. President Donald Trump has publicly urged Iranian opposition forces to topple the country’s longstanding repressive government system. At the same time, the note says that many senior U.S. officials remain skeptical that a change in regime is imminent, citing media reports. Questions have also grown over how long Washington intends to remain engaged in the campaign; President Trump told the New York Times that the assault could be sustained for "four to five weeks." He declined to outline specifics for how he envisions a transition in Iran unfolding, saying he has "three very good choices" but "won't be revealing them now," according to the New York Times.
The strikes prompted retaliatory actions from Tehran at locations across the Middle East, the Morgan Stanley analysts noted, with energy-producing Gulf states among the places affected by countermeasures.
Investors reacted swiftly to the heightened geopolitical risk, trimming positions in luxury equities that derive a meaningful share of revenue from Middle Eastern consumers during seasonal spending peaks. The move reflected concern that reduced travel, lower in-region consumption or security-driven shifts in shopping behavior could meaningfully disturb sales in the near term.
Context and market reaction
Market declines on Monday encompassed a cross-section of luxury firms with exposure to the Gulf and broader Middle East. The drop in share prices underscores how geopolitical events that affect consumer confidence and mobility can translate quickly into valuation pressures for companies with concentrated seasonal demand.
Analysts and portfolio managers will be watching sales trends through Ramadan and the Eid period closely to see whether the predicted weakening in the "Ramadan rush" materializes, and how sustained any impact may be.