European shares fall as ECB signals interest rates will remain elevated

Euronext Dublin followed the downward trajectory of European peers on Friday, as European Central Bank president Christine Lagarde signalled that interest rates are not likely to fall over the next couple of quarters.

Dublin

The ISEQ All Share fell by 0.91 per cent on Friday to close at 8,025.27, with little on the upside among individual stocks.

While PTSB saw shares rise by 2.43 per cent to €1.90, shares in Ireland’s other two main banks fell. Bank of Ireland lost 0.45 per cent to close at €8.46, while AIB closed at €4.16 after losing 0.19 per cent.

The country’s two listed home-builders also saw losses, with Cairn Homes falling by 2.33 per cent to €1.17 and Glenveagh Properties losing 0.50 per cent to close at €0.96.

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Paddy Power-parent company Flutter Entertainment fell by 1.46 per cent, to close at €138.80. The company has confirmed this week that it will delist from Euronext Dublin as it plans to add a New York listing in the first quarter of 2024.

Also set to leave Euronext Dublin as part of a merger with US peer WestRock is Smurfit Kappa, as the packaging giant lost 0.31 per cent on the Irish exchange on Friday to close at €32.40.

Budget airline Ryanair fell by 1.15 per cent to €16.74, while food company Kerry Group fell by 2.35 per cent to €72.46.

Those in the green by the end of the day included building materials company Kingspan, which rose by 0.46 per cent to €66.08.

Other upward movers were renewable energy company Greencoat Renewables, which rose by 0.22 per cent to €0.89, and shipping and transport group Irish Continental which gained 0.34 per cent to €4.36.

London

The UK’s exporter-focused FTSE 100 Index fell by 1.28 per cent to close at 7,360.55, while the FTSE Mid-Cap 250 Index lost 1.02 per cent to close at 17,853.09.

UK shares slipped on Friday as falling metal prices sparked a sell-off in metal mining shares, and data showed the UK economy failed to grow in the third quarter.

Shares of Diageo fell by 12.20 per cent after the Guinness-maker said it expected organic operating profit growth to decline in the first half of fiscal 2024 due to weakening sales in Latin America and the Caribbean and higher trade investments.

British home-builder Redrow fell by 4.15 per cent as it said that it expects annual profit and revenue to be at the lower end of its forecast range, hurt by a subdued autumn housing market.

During early trade on Friday, all FTSE Russell indexes were hit by a technical issue that prevented them being published for 40 minutes, index provider parent LSEG said. Market analysts said it was only index calculations that were affected, while stocks traded normally.

Europe

The pan-European STOXX 600 Index lost 1 per cent on Friday to close at 443.30. Meanwhile, the German DAX Index fell by 0.77 per cent to 15,234.39, and the French CAC40 lost 0.96 per cent to close at 7,045.25.

European shares were hurt by higher bond yields as European Central Bank president Christine Lagarde signalled that interest rates are unlikely to fall any time soon.

She said on Friday that euro zone inflation could tick up in the coming months, but European Central Bank interest rates being held at their current level at least for several quarters could still get price growth back to 2 per cent.

Richemont shed 5.2 per cent after the Swiss luxury group reported weaker-than-expected earnings, pulling down rivals LVMH, Kering and Hermes between 1.56 per cent and 3.82 per cent.

GN Store Nord jumped 10.99 per cent to top the STOXX 600 as the Danish hearing aid and audio solutions-maker targeted further cost savings from its reorganisation, after in-line third-quarter results.

New York

Wall Street’s main indexes gained on Friday despite warnings from the US Federal Reserve chair Jerome Powell about further tightening if needed on Thursday.

Investors have turned their focus to reports on consumer and producer prices as well as retail sales in the coming days, which will further shape interest rate expectations.

Data on Friday showed U.S. consumer sentiment fell for a fourth straight month in November, and households’ expectations for inflation rose again.

Plug Power plunged more than 40 per cent during the day, after the hydrogen fuel cell-maker raised going concern doubts.

Illumina shares also dropped as the gene-testing company trimmed its full-year profit forecast for the second straight quarter.

– Additional reporting from Reuters