European shares rally after hitting session lows

European shares ended higher on Friday, recovering after hitting session lows following bumper US jobs data that strengthened the case for another big interest rate hike by the Federal Reserve.

The continent-wide Stoxx 600 index closed up 0.5 per cent, ending the week up 2.5 per cent to mark a tentative rally in the first week of trading of the third quarter after slumping 16 per cent over the first six months of the year.

Dublin

The Iseq index moved 1.5 per cent higher to 6,481.32 on Friday, with banking stocks standing out as a bright spot. AIB gained 1.9 per cent to €2.19, while Bank of Ireland advanced 1.4 per cent to €5.96, as the International Monetary Fund said late on Thursday that the Irish economy remained well placed for growth in spite of indirect headwinds coming from the war in Ukraine.

Construction-related plays were also in demand, with CRH up 2.4 per cent at €34.42, while Kingspan advanced 4.1 per cent to €58.76.

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However, Ryanair was out of sorts, falling 1.2 per cent to €11.92, amid rising oil prices.

London

UK’s FTSE 100 inched 0.1 per cent higher, boosted by energy and consumer staple stocks at the end of a week marked by political turmoil in the UK, soaring energy prices in Europe and hawkish comments from major central banks.

Oil majors BP and Shell gained 0.3 per cent and 0.5 per cent respectively, boosting the commodity-heavy FTSE 100 as crude prices climbed in volatile trade on concerns of supply tightness.

Nevertheless, energy stocks were among the worst performers this week as crude prices declined on concerns over a potential recession-driven demand downturn.

Housebuilder Vistry Group rose 2.2 per cent after it forecast gross margins to rise significantly in fiscal 2022, riding on strong demand across its businesses.

Europe

Automakers were the biggest sectoral gainers, and provided the biggest boost to Germany’s DAX which closed up 1.3 per cent to lead gains among regional peers.

The DAX marked its third session higher as it recovered from its lowest since November 2020 hit earlier this week.

The Stoxx 600 had fallen up to 0.6 per cent at one stage during trading, before rallying, after US nonfarm payrolls data for June came in much higher than expected, prompting traders to firm up bets for a 0.75 percentage point hike by the Fed this month.

“Better-than-expected jobs data raised the likeliness of a bumper rate hike this month, but ... it seems the focus will instead shift to corporate earnings,” said Joshua Mahony, senior market analyst at online trading platform IG.

Among single stocks, TAG Immobilien slumped 6.1 per cent after the German real-estate group said it was raising €200 million to refinance its latest acquisition in Poland.

Shares of Leonardo gained 4.1 per cent after the Italian defence group in a consortium including Telecom Italia exercised a pre-emption right allowing it to match a rival bid in the tender to set up a national cloud infrastructure.

New York

US stocks were lower in midafternoon amid choppy trading, after a robust jobs report stoked fears of aggressive interest rate hikes by the Fed to keep inflation in check.

After a brutal first half of the year, US stock markets started July on a solid footing as investors took relief from easing commodity prices and the Fed hinting at a more tempered programme of rate hikes amid concerns of a recession.

Twitter shares fell after a report said Elon Musk’s deal to buy the social media company was in “serious jeopardy”.

Levi Strauss rose after the company’s second-quarter results beat estimates, helped by strong demand for its denim jeans and jackets.

GameStop tumbled after the video game retailer said it had terminated the employment of chief financial officer Michael Recupero.