For the first time, the Spanish leather goods company Loewe is the hottest brand in the world, according to rankings compiled by fashion platform Lyst.

The house’s logo could not be more appropriate to the luxury market right now. Just as fashionistas must decipher the quadruple letter Ls inside the intricate design, investors must figure out the patterns of spending in the two most important luxury markets: China and the US.

Loewe’s parent LVMH gave us some clues on Tuesday. Unfortunately, they were not the ones investors had been looking for. Shares in LVMH fell as much as 4.5% in early trading on Wednesday, dragging down the whole sector.

LVMH reported organic sales growth of 17% in the three months to 30 June, comfortably beating the Bloomberg consensus of analysts estimates of a 15.1% increase. The closely watched measure of fashion and leather goods organic sales rose 21% in the second quarter, also just ahead of expectations of a 20.8% gain.

But this is far from the massive outperformance that LVMH delivered in the first quarter, when both group organic and fashion and leather goods sales came in at almost twice the level anticipated.

First half operating profit, at €11.6 billion ($12.8 billion), slightly missed expectations, as the fashion and leather goods margin fell by 0.9% points to 40.5% after being held back by a high level of investment in the group’s brands, including in Pharrell Williams’ first catwalk show for Louis Vuitton menswear.

LVMH failing to deliver another blockbuster quarter should be a worry for the company controlled by Bernard Arnault—and the high-end sector as a whole.

LVMH is the world’s biggest luxury group. With a market capitalization of close to $500 billion, it has the resources to reinvest in its brands, led by Louis Vuitton and Dior, as well as operate the most extravagant stores and recruit the best designers and celebrities to steer its houses.

For example, the company said last week that it would become a premium sponsor of the 2024 Summer Olympics in Paris. It is pouring €150 million into the Olympic and Paralympic games, the biggest sponsorship commitment of any company, Bloomberg News reported.

In short, it can shout louder than all other luxury brands, so that when a consumer decides to buy a handbag, they are more likely to choose Fendi or Celine than a rival.

Yet for all of LVMH’s might, there there are some trends that it could not sidestep.

The first is a slowdown in the US. Chief Financial Officer Jean-Jacques Guiony said fashion and leather goods sales to US consumers were slightly negative in the second quarter. The weakness was concentrated on aspirational customers, with a reduction in demand for entry-level products, online sales and in second-tier cities. This also affected cognac revenues and to a lesser extent jewelry.

In contrast, sales to wealthier customers have held up. But Cartier-owner Cie Financiere Richemont SA, which operates in the high-end jewelry and watch market, last week pointed to deceleration in the US, raising the prospect of a slowdown among this cohort too.

Of course, some of the US weakness reflects a shift in the location of spending, as more Americans travel to Europe. Even so, given the fact that top-end groups, including LVMH, have opened US stores apace over the past couple of years, investors must be on watch.

For the industry to maintain momentum as the US cools, China must pick up the slack — or the bling baton as I like to call it. That is happening, but not at the pace that was expected in April, when LVMH delivered that blowout quarter.

LVMH said fashion and leather goods sales to Chinese consumers in the first half were 40% to 45% higher than two years ago, with Louis Vuitton ahead and Dior slightly behind. But the Chinese economy is slowing. It’s not clear whether the industry can maintain momentum.

And if the bling king  is facing headwinds, then the picture is even more worrying for other groups, including Gucci-owner Kering SA and Prada SpA, both of which report later this week.

Against this backdrop, those in turnaround mode look the most challenged. This includes Gucci, which last week announced a management shakeup, and Burberry Group Plc, which is trying to elevate its products from premium to haute-luxury.

For all of Tuesday’s disappointment, LVMH should continue to outperform, given its scale, top-of-mind brands and product diversification, although it is more exposed to the US than many rivals.

It should be joined in the winners camp by those companies catering to the truly wealthy, not the merely comfortable, such as Hermes International. Brunello Cucinelli SpA, whose “stealth wealth” styles are at the forefront of the quiet luxury movement, recently raised its full-year sales guidance for the second time this year.

But across the industry, valuations have escalated since April in anticipation of Chinese shoppers roaring back. Even with recent weakness, the MSCI World Textiles, Apparel and Luxury index is up about 18% from the start of the year through Tuesday’s close. LVMH had risen about 26% over the same period.

Given this run-up and the huge excitement that has built for China’s return, an in-line performance by the most muscular name won’t be enough to keep luxury stocks in fashion.

Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.