FTSE 100 slips after 3-day rally as Burberry drags

UK’s blue-chip FTSE 100 index fell on Thursday after a three-day run of gains as Burberry tumbled after it said it would struggle to meet revenue targets if a slowdown in luxury spending continued.

Burberry’s shares slid 8.1%, on track for their biggest one-day percentage loss since the height of pandemic-driven selloff in March 2020, and dragged on European luxury peers including LVMH (EPA:LVMH) and Kering (LON:0IIH).

The company reported a sharp slowdown in comparable store-sales growth in its second quarter to 1%, down from 18% in the first, as growth in China evaporated.

“Burberry’s warning off the back of a sharp slowdown in sales is the latest sign the luxury goods sector is not immune to an uncertain economic backdrop,” noted Russ Mould, investment director at AJ Bell.

“All it can do right now is protect and invest in its brand and wait for an improvement in the backdrop.”

The FTSE 100 dropped 0.4%. The index had scaled a near one-month high on Wednesday after easing inflation figures in October fuelled hopes that the Bank of England may not have to tighten monetary policy further.

Investors added to their bets on BoE rate cuts next year, with three 25-basis-point reductions by December 2024 almost fully priced in.

The midcap FTSE 250 index dropped 0.9% after rallying to a two-month high a day earlier.

Hotel Chocolat soared 162.6% to a one-and-a-half year high after the British specialist chocolatier agreed to a 534 million pound ($662 million) takeover offer from Mars Inc.

Meanwhile, shares of Shell (LON:RDSa), Hargreaves Lansdown (LON:HRGV) and B&M European Value fell as they traded without entitlement for dividend.

Shares of supermarket chain Tesco (LON:TSCO) gained 1.5% after Goldman Sachs (NYSE:GS) started coverage with a “buy” rating.

Halma (LON:HLMA) Plc gained 5% after the technology firm posted record half-year revenue.