By Mimosa Spencer

PARIS -Robust demand for Louis Vuitton and Dior products boosted first-quarter sales at the world’s largest luxury goods conglomerate LVMH, kicking off earnings season for the industry with a show of resilience despite geopolitical tensions, COVID-19 lockdowns in China and volatile stock markets.

High-end fashion brands drove a 30% rise in sales of its largest division, fashion and leather goods, on a like-for-like basis, beating analyst expectations of 17%, according to consensus estimates cited by RBC.

“The year starts on a high note,” said Luca Solca of Bernstein, citing “another material beat” of consensus expectations, particularly the fashion and leather goods activity.

Dior and Celine grew faster than other labels, while Louis Vuitton “is never very far from the average for the division,” LVMH Chief Financial Officer Jean-Jacques Guiony told analysts in a call.

The group will continue to raise prices at its fashion labels – but reasonably – to reflect the cost of business, said the executive.

Luxury industry prices have increased over the last six months by around 8 percent since September last year, with hikes in the range of 20%-23% at Louis Vuitton and Tiffany, according to recent estimates from HSBC.

Watches and jewellery labels also performed strongly, with sales for the high end products up 19%, boosted by Tiffany, particularly in the United States. The American luxury brand is undergoing a renewal drive led by its new French owner targeting younger audiences, with marketing campaigns featuring K-pop star Rose wearing chunky gold jewellery.

Traffic in Sephora stores in the U.S. and France helped push up sales at the selective retail division, which clocked 24% organic sales growth. But the luxury group’s DFS travel retail business continued to suffer from travel restrictions in Asia, including Hong Kong where tourists have not yet returned.

Turnaround efforts at DFS could help it break even this year, predicted Guiony.

The executive sought to reassure investors concerned about disruptions in China from restrictions aimed at preventing the spread of coronavirus, although he cautioned that in addition to lockdowns in Shanghai and Shenzhen, traffic is down in cities that are not affected by such measures, with people travelling less.

“Obviously this is an impact – it’s a fairly recent impact so you don’t see it in the numbers,” he said, noting that the effects seen in April so far are similar to the second half of March. Drawing on experience from previous lockdowns in China, the executive predicted that demand would return quickly once restrictions ease.

“It is probably worth looking beyond 2Q China disruption,” said Citi, which plans to retain a buy rating on shares. Overall sales at LVMH rose by 23% on a like-for-like basis, which strips out the effect of currency changes, in the three months to March to 18 billion euros, beating a consensus estimate for 18% growth, cited by Jefferies.

Hermes reports first-quarter sales on April 14 and Kering on April 21.

(Reporting by Mimosa Spencer; editing by David Evans; Editing by David Gregorio, Bernard Orr)

By Hannah Lang

WASHINGTON -The dollar rebounded on Tuesday after digesting slightly softer-than-expected U.S. inflation data, while the euro extended losses ahead of a policy-setting meeting at the European Central Bank.

Federal Reserve Governor Lael Brainard said on Tuesday that there were some signs of “welcome” cooling in the latest inflation readout, but emphasized that the central bank is still proceeding with a series of interest rate hikes, as well as an effort to trim its balance sheet.

“I’ll be looking to see whether we continue to see moderation in the months ahead,” Brainard told the Wall Street Journal in an interview, referring to inflation in the “core” goods category.

The U.S. Consumer Price Index showed that prices rose 8.5% in March compared with a year ago, boosted by the soaring cost of gasoline but tempered by a moderation in prices of used cars and trucks. The core CPI fell short of estimates, landing at 6.5%.

Brainard’s comments highlighted that the Fed “is not pivoting at this point,” providing an assurance for the greenback after a morning of choppy trading, said Bipan Rai, head of FX strategy at CIBC Capital Markets in Toronto.

“The path of least resistance is still for tighter policy, and also for an aggressive unwind of the balance sheet, and as a result of that, I think the dollar is stabilizing a little bit,” he said.

The dollar index rose 0.26%, with the euro down 0.51% to $1.0828.

Benchmark 10-year U.S. Treasury yields eased to 2.727%, after reaching 2.793% on Monday, the highest since January 2019.

The inflation numbers initially suggested the Fed might not need to be as aggressive in the second half of this year as some had originally expected, said Edward Moya, senior market analyst at OANDA.

“While this doesn’t change anything that the Fed will do over the next couple of meetings, it does support the idea that maybe they won’t have to be as aggressive with tightening policy later on in the year, and that’s why we saw the dollar drop somewhat following the initial reaction,” said Moya.

The euro declined Tuesday as markets shifted their attention to the ECB policy meeting due later this week, with money markets pricing in about 70 basis points of interest rate tightening by December.

“The big focus for the ECB this week is whether or not the timeline to remove accommodative policy settings has shrunk, given the fact that the chorus of voices on the governing council have become more hawkish,” said Rai.

Investors will likely look for any indication that the ECB will wind down its asset purchase program, which could tee up a rate hike in September, Rai said.

Still, any rebounds in the euro will likely be limited due to the Russian war against Ukraine, said Moya. In addition to pushing up gasoline prices, the war, now in its second month, has led to a global surge in food prices as Russia and Ukraine are major exporters of commodities including wheat and sunflower oil.

“There’s just this overall belief that until you have a resolution with the war in Ukraine, their economic outlook is really going to be a big question mark, and that’s not necessarily going to be good for flows for the euro,” said Moya.

========================================================

Currency bid prices at 3:58PM (1958 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 100.2900 100.0400 +0.26% 4.837% +100.3300 +99.7340

Euro/Dollar $1.0829 $1.0884 -0.50% -4.74% +$1.0905 +$1.0821

Dollar/Yen 125.3400 125.3800 -0.03% +8.88% +125.7500 +124.7600

Euro/Yen 135.72 136.43 -0.52% +4.14% +136.6400 +135.5500

Dollar/Swiss 0.9324 0.9312 +0.13% +2.22% +0.9344 +0.9288

Sterling/Dollar $1.3000 $1.3029 -0.20% -3.86% +$1.3054 +$1.2994

Dollar/Canadian 1.2642 1.2634 +0.08% +0.00% +1.2661 +1.2583

Aussie/Dollar $0.7455 $0.7420 +0.48% +2.56% +$0.7493 +$0.7400

Euro/Swiss 1.0096 1.0134 -0.37% -2.63% +1.0155 +1.0090

Euro/Sterling 0.8328 0.8352 -0.29% -0.86% +0.8360 +0.8320

NZ $0.6855 $0.6825 +0.45% +0.17% +$0.6889 +$0.6808

Dollar/Dollar

Dollar/Norway 8.7700 8.8095 -0.31% -0.31% +8.8340 +8.7370

Euro/Norway 9.5026 9.5958 -0.97% -5.10% +9.6023 +9.4864

Dollar/Sweden 9.5195 9.4996 -0.27% +5.56% +9.5389 +9.4513

Euro/Sweden 10.3091 10.3375 -0.27% +0.73% +10.3562 +10.2890

(Reporting by Hannah Lang in Washington; Editing by Leslie Adler and Andrea Ricci)

By Laura Sanicola

(Reuters) -Oil prices settled higher on Tuesday as lockdowns eased in Shanghai and as Russian oil and gas condensate production fell to 2020 lows and OPEC warned it would be impossible to replace potential supply losses from Russia.

Brent crude futures rose $6.16, or 6.3%, to settle at $104.64 a barrel by 1:48 p.m. EDT. U.S. West Texas Intermediate rose $6.31, or 6.7%, to settle at $100.60. On Monday, both benchmarks fell about 4%.

Shanghai said more than 7,000 residential units had been classified as lower-risk areas after reporting no new infections for 14 days. Districts have been announcing which compounds can be opened up.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) warned it would be impossible to replace 7 million bpd of Russian oil and other liquids exports lost in the event of sanctions or voluntary actions.

Russian oil and gas condensate production fell below 10 million barrels per day (bpd) on Monday to its lowest since July 2020, two sources familiar with data said on Tuesday, as sanctions and logistical constraints hampered trade.

Sources said Russia’s average oil output fell more than 6% to 10.32 million bpd on April 1-11 from 11.01 million in March.

The European Union has yet to embargo Russian oil, but some foreign ministers said the option is on the table.

“The oil market is still vulnerable to a major shock if Russian energy is sanctioned, and that risk remains on the table,” wrote Edward Moya, a senior market analyst with OANDA.

OPEC on Tuesday lowered its Russian liquids production forecast by 530,000 bpd for 2022, but also cut its forecast for growth in world oil demand, citing the impact of Russia’s invasion of Ukraine, soaring crude prices and resurgence of the pandemic in China.

Indian Oil Corp (IOC), which bought Russian Urals in previous tenders, has removed the grade from its latest crude tender. U.S. President Joe Biden told Indian Prime Minister Narendra Modi on Monday that buying more oil from Russia was not in India’s interest.

IEA member nations are planning to release 240 million barrels over the next six months from May in an effort to calm the market.

While the release will ease immediate tightness, analysts suggested it will not solve the structural deficit, and stocks will need to be replenished.

A preliminary Reuters poll showed U.S. crude oil inventories are likely to have risen by 1.4 million barrels in the week to April 8 after declining for three consecutive weeks.

The poll was conducted ahead of a report from the American Petroleum Institute due at 4:30 p.m. EDT (2030 GMT) on Tuesday.

(Reporting by Laura Saniciola, Additional reporting by Rowena Edwards in London, Mohi Narayan in New Delhi and Liz Hampton in DenverEditing by David Goodman, Kirsten Donovan and David Gregorio)

WASHINGTON – U.S. Trade Representative Katherine Tai met Indian External Affairs Minister Subrahmanyam Jaishankar on Tuesday and both agreed the newly relaunched U.S.-India Trade Policy Forum could help boost bilateral trade and reduce barriers, Tai’s office said.

Tai and one of her deputies, Sarah Bianchi, discussed bilateral trade relations and the implications of Russia’s war against Ukraine for global trade and economic developments, USTR said in a statement.

The meeting came a day after President Joe Biden told Indian Prime Minister Narendra Modi that buying more oil from Russia was not in India’s interest and could hamper the U.S. response to the war in Ukraine.

The United States is seeking more help from the world’s largest democracy in condemning Russia’s invasion of Ukraine and pressuring Moscow to halt what it calls a “special military operation.” U.S. officials say India has its own concerns about deepening ties between Russia and China.

Tai and Jaishankar also shared views on Biden’s initiative to launch an Indo-Pacific Economic Framework aimed at strengthening regional economic cooperation in critical areas such as supply chain resilience, USTR said.

Washington has signaled it has no intention of engaging with China in the new framework, which it sees as a way to push back against China’s bid to create a regional sphere of influence and become the world’s most influential power.

“They shared the perspective that the U.S.-India Trade Policy Forum (TPF), re-launched in November 2021, holds substantial promise as a mechanism for expanding bilateral trade and reducing barriers, including with respect to trade in agriculture,” it added.

The two officials agreed to remain in touch as work continues toward a 2022 meeting of the U.S.-India trade forum, USTR said, but gave no specific date.

(Reporting by Andrea Shalal; Editing by Chris Reese and Leslie Adler)

By Katanga Johnson

WASHINGTON -Global equities reversed earlier gains on Tuesday, while U.S. Treasury yields slipped as data showing a jump in U.S. inflation was in line with expectations gave investors some relief.

The U.S. consumer price index rose 1.2% last month, the biggest increase in 16-1/2 years and cementing the case for a 50 basis points interest rate hike from the Federal Reserve next month.

However, the benchmark 10-year Treasury yield was last down 6.1 basis points to 2.721%, its first decline in eight sessions, as the inflation number had been priced in and also reflecting the market’s unease that an aggressive policy response to inflation from the Federal Reserve could undermine economic growth.

“Inflation is still a really big part of the macro narrative here (but) we’re seeing some encouraging signs beneath the surface,” said Mike Reynolds, vice president of investment strategy at Glenmede.’

“Market has been picking up today on the fact that the CPI was a bit softer than expected… Anything that indicates a softening momentum on the inflation front is going to mean that the Fed perhaps may not have to go as aggressively in tightening monetary policy.”

Oil prices climbed on Tuesday as Russian oil and gas condensate production fell to 2020 lows and OPEC said it would be impossible to replace potential supply losses from Russia. [O/R]

On Wall Street, the Dow Jones Industrial Average fell 0.02% and the S&P 500 lost 0.02%.

Meanwhile, the Nasdaq Composite added 0.12%.

The pan-European STOXX 600 index lost 0.35% and MSCI’s gauge of stocks across the globe shed 0.24%.

“Markets have decided that central banks are late and need to do more to tame inflation, and moderate volatility in equities is not enough to stop this,” said Nordea chief analyst Jan von Gerich. “The reason for the wobble in equity markets is higher rates and geopolitics.”

While U.S. 10-year Treasury yields pulled back from their highs, they are up almost 45 basis points so far this month.

More disconcerting for equities is the move in real or inflation-adjusted yields, with the yield on the 10-year U.S. Treasury Inflation-Protected Securities (TIPS) approaching 0%.

In Europe, German Bund yields climbed to almost 0.88%, their highest level since 2015, British gilt yields rose to fresh multi-year highs.

Germany’s ZEW economic research institute said its economic sentiment index fell to -41.0 points from -39.3 in March, declining less than expected.

Investors also await Wednesday’s first-quarter earnings season for big banks, many of which are expected to report a sharp decline in earnings from a year earlier, according to analysts, who noted many lenders benefited from exceptionally strong deal-making, trading and funds set aside for loan losses being released.

ASIA MARKETS GAIN GROUND

The dollar index, a measure of the greenback’s value against six peers, rose 0.26%, after earlier in the week touching its highest level in almost two years.

Japan’s yen, however, has been hurt by the Bank of Japan’s commitment to maintaining ultra-easy policy even as the Fed embarks on tightening monetary policy.

The latest warnings from Japanese policymakers, with Prime Minister Fumio Kishida saying on Tuesday that rapid currency moves are undesirable, failed to shore up the yen, which has shed over 3% this month.

“Markets at this point are not sure policymakers are genuinely inclined to intervene on the yen and that’s why we have most likely seen a limited impact,” said James Lord, global head of FXEM Strategy at Morgan Stanley. “Typically verbal intervention doesn’t have much impact on currency markets, and that’s not specific to the yen.”

The euro traded down 0.53% to $1.0825, unable to hold gains from a mini-relief rally on Monday, after French leader Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting.

China’s markets and oil prices gained ground as signs emerged that some of the COVID-19 restrictions were easing in financial hub Shanghai.

A relaxation of China’s regulations on the gaming sector also gave investors heart after a multi-year crackdown on parts of the country’s technology industry.

China’s blue chip CSI300 Index dipped into negative territory mid-session but roared back later to rally almost 2%.

U.S. crude rose 7.17% to $101.05 per barrel and Brent was at $105.12, up 6.74% on the day.

The European Union has yet to agree any embargo on Russian oil over the war in Ukraine, but some foreign ministers have said the option is under discussion.

(Additional reporting by Dhara Ranasinghe in London and Scott Murdoch in Hong KongEditing by Nick Macfie, Chizu Nomiyama, Susan Fenton and Barbara Lewis)

By Seher Dareen

(Reuters) – Gold advanced more than 1% on Tuesday as Treasury yields eased after U.S. inflation data largely met expectations, reducing the likelihood of long-term aggressive policy tightening by the Federal Reserve.

Spot gold XAU= was up 0.7% at $1,967.61 per ounce by 2:39 p.m. ET (1839 GMT), having hit its highest in nearly a month earlier in the session. U.S. gold futures GCv1 settled up 1.4% at $1,976.10.

The benchmark 10-year U.S. Treasury yield slipped after data showed inflation accelerated in March, but less than many market participants had expected. USD/ US/ (Full Story) MKTS/GLOB

While gold is considered an inflation hedge, rising prices can lead central banks to hike interest rates, pushing up bond yields and increasing the opportunity cost of holding zero-yield bullion. “If we’re going to continue to see core inflation not surging to the same extent (as headline inflation), the Fed … may not be as aggressive as when core was moving higher,” said Bart Melek, head of commodity strategies at TD Securities. Federal Reserve Governor Lael Brainard said the combined effort of trimming its balance sheet and a series of rate hikes would help bring down inflation, adding a moderation in “core goods” inflation, excluding energy and food prices, is a “welcome” signal. “This doesn’t change anything over the short term,” with the Fed still expected to raise rates by 50 basis points next month to tame inflation, said Edward Moya, senior market analyst with OANDA. Gold continued to find support as a safe haven from developments surrounding Ukraine, with Russian troops massing for a new offensive. (Full Story) (Full Story) Palladium XPD= fell 3.5% to $2,346.66 per ounce on profit-taking, after hitting its highest since March 24 at $2,550.58 on Monday following the suspension of trading of the metal sourced from key producer Russia in London. Platinum XPT= was down 1.2% at $964.79. (Full Story) The suspension could exacerbate near-term palladium supply tightness, Standard Chartered analysts said in a note. Spot silver XAG= rose 1.1% to $25.35 per ounce.

(Reporting by Seher Dareen and Ashitha Shivaprasad in Bengaluru; Editing by Richard Chang and Vinay Dwivedi)