Shares in Inditex, the parent company of fast fashion darling Zara, were up 6.7% in early trading on Thursday. This surge came on the heels of a higher-than-expected sales report from its recent Autumn/Winter collections. From August 1st to September 7th, the company’s constant currency sales exploded by 9% year-over-year. Despite that success, its second-quarter sales fell short of investor expectations.
Even with disappointing second-quarter results, analysts and investors have responded positively to the new sales information. Customers have responded in droves to the company’s new seasonal collections. This reflects an excellent continued demand as we head into the fall semester. This warm reception has further assuaged investor concerns over Inditex’s growth prospects.
By 8:35 a.m. in London (3:35 a.m. ET), shares of Inditex had risen significantly, reflecting a broader trend in the market where major regional bourses were largely in positive territory. The broad Stoxx 600 index was up 0.5% a few minutes after the opening bell, with all but two of the index’s 19 sectors in the green.
Novo Nordisk announced intentions to reduce their workforce by some 9,000 positions. Nonetheless, the company’s stock soared by 2.5%, or $170 million in market capitalization, in early trading. This troubling paradox of rapid layoffs and soaring stock performance follows one of the many tight ropes investors have to walk on in today’s market.
Internationally, Asia-Pacific markets were buoyant as they climbed overnight, led by investors weighing good news on inflation out of China. As of August, the country has seen its first negative CPI print, with consumer prices falling 0.4% year on year. This drop was much larger than the 0.2% decrease that was anticipated. Either way, economists are watching these numbers very closely ahead of Thursday’s release of the consumer price index reading. Forecasts call for a 0.3% increase on a month-to-month basis, with an annual headline CPI of 2.9%. We continue to forecast the core reading to stay steady at 3.1%.
Analysts remain optimistic about market momentum. Citi strategists noted, “The momentum has improved materially into the first 5wks of [the third quarter].” This mood reflects a serious undeclared optimism about a recovery lurking everywhere across sectors. Companies are making major moves to adjust to new consumer habits in a world forever changed by the pandemic.