By Kit Rees and Michael Msika, Bloomberg Markets Live reporters and strategists

LVMH’s disappointing results burst the bubble for luxury bulls celebrating what looked like a rapid recovery for the industry. The hype of the past few months now seems to have come too early.

Luxury stocks enjoyed a stellar resurgence since the end of November, with the sector getting close to reclaiming last year’s highs. It was a bounce that closely resembled one seen almost exactly a year earlier. Optimism based on consumer-boosting stimulus in China, resilient global growth and strong results from Richemont jacked up expectations, only for these to be dashed when LVMH reported this week. Swatch’s earnings this morning don’t bode well either after a sharp drop in profit that was driven by slumping Chinese consumer demand. Suddenly, the sector is back to screening as expensive.