Burberry leads luxury rebound as FTSE 100 lags

​​​Burberry's turnaround gains momentum

​Burberry's shares have surged more than 30% so far in 2025, marking one of the strongest performances in the luxury sector. The British fashion house returned to sales growth after several challenging quarters, vindicating CEO Joshua Schulman's strategic refocus on core products.

​The company's renewed emphasis on its heritage outerwear and signature scarves has resonated with customers. This back-to-basics approach represents a clear departure from previous strategies that had diluted the brand's identity in pursuit of broader market appeal.

​Investors have welcomed the early signs of success under new management. The share price recovery reflects growing confidence that Burberry can regain its premium positioning in the competitive luxury market without sacrificing profitability.

​The turnaround comes at a crucial time for British luxury brands. With global economic uncertainty persisting, companies that can demonstrate pricing power and brand strength are increasingly valued by investors seeking defensive quality in the shares market.

​Mixed signals from luxury demand

​Burberry's sales improvement has been driven by stronger momentum in key product categories. Outerwear and scarves, long associated with the brand's heritage, showed particularly robust performance during the quarter, suggesting customers are returning to classic luxury items.

​China has emerged as a bright spot, with signs of demand picking up despite broader concerns about the region's economic health. This matters because Chinese consumers remain crucial for luxury goods makers, often accounting for a significant portion of global sales.

​However, European tourism has softened, presenting a headwind for luxury retailers that rely on tourist spending. American consumers have also reduced their spending abroad, reflecting tighter household budgets and changing travel patterns in the wake of higher interest rates.

​The mixed regional picture highlights the challenges facing luxury brands. Success requires balancing exposure to growth markets like China against more mature but historically reliable Western markets that are currently showing weakness.

​Gold miners shine on record prices

​Endeavour Mining jumped 10% after reporting that quarterly earnings had doubled year-on-year (YoY). The surge was driven by record gold prices, which have benefited from safe-haven demand amid geopolitical tensions and inflation concerns.

​Higher gold prices directly translate into improved profitability for producers. When the commodity price rises but extraction costs remain relatively stable, miners enjoy expanding margins that can dramatically boost earnings and cash flow generation.

​The strong performance underscores gold's appeal as both an inflation hedge and portfolio diversifier. Investors have increasingly turned to precious metals as uncertainty around interest rates, currency movements and geopolitical risks has intensified throughout the year.

​For those looking to gain exposure to gold price movements, miners offer leveraged exposure compared to holding physical gold. However, operational risks and company-specific factors mean mining stocks can be more volatile than the underlying commodity.

​Airlines and industrials find support

​Wizz Air shares climbed nearly 8% despite the budget carrier halving its 2026 capacity growth outlook. Rather than viewing the reduced expansion negatively, investors welcomed the airline's focus on cost discipline and plans to shift operations to cheaper bases.

​The positive reaction reflects market sentiment that profitability matters more than growth at any cost. Airlines that demonstrate operational efficiency and sensible capacity management tend to trade at premium valuations, particularly in uncertain economic environments.

​Engineering group Spirax advanced 4% after reporting year-on-year improvement while maintaining full-year guidance. The industrial sector has shown resilience despite manufacturing headwinds, with well-managed companies continuing to deliver for shareholders.

​Homebuilder Persimmon gained 2% on better sales rates and resilient pricing. The property sector has weathered concerns about affordability, with leading housebuilders demonstrating that demand remains solid for well-located homes despite higher mortgage rates.

​Disappointing updates weigh on indices

3i Group shares fell to their lowest level since 2022 following slower like-for-like growth at Action, one of its key investments. The private equity firm's struggles highlight concerns about consumer discretionary spending in Europe.

​The discount retailer had previously been a standout performer in 3i's portfolio. Slowing growth raises questions about whether the European consumer is finally cracking under the pressure of elevated inflation and higher living costs.

Aviva declined over 5% as investors focused on soft spots in UK general insurance. Despite management upgrading long-term targets, the market zeroed in on near-term challenges in the competitive insurance market where pricing power has become more difficult to maintain.

​The insurer's struggles reflect broader sector concerns. Insurance companies face a delicate balance between maintaining underwriting discipline and retaining market share in a highly competitive environment where customers are increasingly price-sensitive.

​FTSE 100 trails European peers

​The FTSE 100 underperformed continental European indices, weighed down by multiple factors. Ex-dividend payments from major constituents, soft energy names and disappointing earnings updates from blue-chip companies all contributed to the lag.

​Energy stocks faced particular pressure as oil prices remained muted. BP and Shell both declined over 1%, reflecting concerns about demand growth and the challenges facing traditional energy companies in an increasingly competitive market.

​The index's commodity-heavy composition means it's particularly sensitive to movements in oil and metals prices. When these raw materials weaken, it creates a significant drag on overall index performance that can offset strength in other sectors.