European shares rose on Thursday boosted by consumer staples and energy stocks, but data suggesting euro zone inflation remains stubbornly high bolstered fears of more European Central Bank rate rises.
The continentwide Stoxx 600 reversed early losses and closed 0.5 per cent higher. Energy stocks rose 1.4 per cent supported by firm crude prices on signs of a strong economic rebound in top crude importer China. A sharp weakness in sterling lifted UK’s exporter-heavy FTSE 100 index up 0.4 per cent.
London’s internationally focused consumer staples stocks such as Diageo and Unilever rose over 1 per cent each, while the European food and beverage index added 1.8 per cent.
“There’s certainly the assumption that there is still mileage in the tank when it comes to price increases, that margins can be protected, the consumer is going to be resilient to a degree and these companies are still going be able to make money,” said Danni Hewson, financial analyst at AJ Bell.
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Meanwhile, consumer price inflation in the 20 countries sharing the euro currency rose 8.5 per cent in February, compared with an increase of 8.6 per cent a month earlier on lower energy prices, but the reading was still above 8.2 per cent projected in a Reuters poll of economists.
DUBLIN
Dublin’s bourse outperformed its European rivals, rising 2 per cent to 8,393. The strong performance was driven by building materials giant CRH.
The company announced that it plans to spend $3 billion (€2.8 billion) buying back its own stock, more than double the amount committed last year, after posting solid full-year results that left it sitting on what it described as “the strongest balance in our history”.
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It also announced plans to move its primary shares listing to the US with North America now accounting for three-quarters of its earnings. The company’s shares were up by nearly 8 per cent at €48.01 by close.
Cairn Homes saw its shares rise 2.7 per cent to 99 cent after it reported “strong sales momentum” in 2023. The Irish home builder saw operating profits rise 76 per cent to €103 million last year, while revenues climbed 46 per cent to €617.4 million as the construction industry recovered from its extended pandemic stoppages.
Shares in Paddy Power owner Flutter dropped 0.9 per cent after the betting company reported full-year core profit at the lower end of its forecast range. Elsewhere AIB, Bank of Ireland and Ryanair were all marginally up by 0.3-0.5 per cent.
LONDON
UK’s FTSE 100 fell on Thursday as declines in stocks trading ex-dividend weighed, while downbeat earnings from Flutter and Beazley also contributed.
The blue-chip FTSE 100 lost 0.4 per cent, nearly erasing its Wednesday gains. Shares of HSBC fell 4.2 per cent, taking the broader banking index down 2.9 per cent as it traded without entitlement for dividend payout.
Other stocks trading ex-dividend included The Berkeley Group Holdings and Hargreaves Lansdown, which fell 2 per cent and 2.2 per cent respectively. Beazley dropped to the bottom of the FTSE 100, falling 8.2 per cent after the insurer said its net profit fell 48 per cent in 2022. The FTSE 100 has had a strong start to the year even clocking its best February performance since 2019 on upbeat corporate results and a recovery in commodity prices as improving Chinese demand influenced the exporter-heavy index.
EUROPE
European markets ended the first two months of this year in gains — a first in four years — with banks adding 18 per cent as lenders benefit from higher net interest income, a consequence of elevated borrowing costs.
Still, the global equity market momentum has stalled of late as investors price in steep prices and higher rates. Credit Suisse tumbled 7 per cent and hit a fresh record low following reports this week about talent leaving the beleaguered Swiss bank. Flutter’s 0.9 per cent fell as it reported full-year core profit at the lower end of its guidance range.
NEW YORK
The benchmark S&P 500 and the tech-heavy Nasdaq fell on Thursday as the 10-year Treasury yield held above 4 per cent following hotter-than-expected labour market data, while strong results from software company Salesforce boosted the blue-chip Dow.
The yield on 10-year Treasury notes touched a fresh four-month high of 4.07 per cent after data showed the number of Americans filing new unemployment claims fell again last week, pointing to sustained strength in the labour market. Another report showed US labour costs grew faster than initially thought in the fourth quarter.
Salesforce soared 11.6 per cent, set for its best day since August 2020, after the cloud-based software firm forecast first-quarter revenue above analysts’ estimates and doubled its share buyback to $20 billion.
Tesla fell 6.4 per cent after chief executive Elon Musk and team’s four-hour presentation failed to impress investors with few details on its plan to unveil an affordable electric vehicle. Macy’s jumped 8.7 per cent after the department store operator forecast full-year profit above Wall Street estimates.
Silvergate Capital plunged 44.3 per cent after the crypto-focused lender delayed its annual report and said it was evaluating its ability to operate as a going concern. — Additional reporting by Reuters/Bloomberg
