European shares flat after rate cut hopes are dashed by US jobs data

European shares were little changed on Friday as gains from upbeat corporate earnings were offset by hotter-than-expected US jobs data that quashed hopes of an imminent rate cut by the US Federal Reserve.

US job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labour market that could make it difficult for the Fed to start cutting interest rates in May as currently envisaged by financial markets.

Dublin

The Iseq index slipped 0.1 per cent. Kingspan added 1.6 per cent to €77.04 on a day when the insulation maker confirmed its involvement in a £150 million (€175.8 million) out-of-court settlement with the UK government related to the Grenfell Tower fire. The company also said it could not confirm or deny whether it agreed to pay out roughly €4.7 million as part of the deal.

Ryanair rose 1.3 per cent to €19.80 on a day when most European airline stocks rose after Wizz Air reported a jump in January traffic.

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But food group Kerry proved a drag on the index, falling 2.9 per cent to €79.32, while Bank of Ireland ended 0.9 per cent lower at €8.25.

London

Britain’s FTSE 100 slipped on Friday after the stronger-than-expected US jobs data pushed up the dollar and yields, sparking a sell-off in commodity stocks.

The blue-chip FTSE 100 ended 0.1 per cent lower, while the mid-cap FTSE 250 added 0.2 per cent. Both indexes logged weekly declines.

Precious metal miners dropped 3.2 per cent leading sectoral declines, while industrial metal miners lost 1.7 per cent, as prices of most metals dropped following a stronger dollar and rise in yields.

Oil and gas shares also fell 1.4 per cent due to lower crude prices. The index was also impacted by a 1.5 per cent sell-off in BP shares after the energy company shut down the Whiting, Indiana refinery of hydrocarbons.

Wizz Air rallied 10.3 per cent to the top of FTSE 250 after the carrier reported a 14.2 per cent increase in passenger traffic in January. Shares in EasyJet added 2.9 per cent and Aer Lingus and British Airways-owner IAG climbed 0.9 per cent.

Sainsbury and Tesco gained 3 per cent and 2.8 per cent respectively after analysts at Morgan Stanley upgraded the UK grocers.

Europe

The pan-European STOXX 600 was flat on the day, hovering near two-year highs hit earlier in the week. Germany’s DAX 40 index hit a record high during the session and closed up 0.35 per cent.

Danske Bank was the best performer on the European benchmark index, jumping 8.1 per cent after the Danish lender reported fourth-quarter results and announced a share buyback programme.

French steel tubes maker Vallourec climbed 3.1 per cent after it said it expects 2023 results will exceed its prior outlook. Electrolux shares closed 0.7 per cent higher, reversing earlier losses triggered by the Swedish appliances maker saying it expects consumer sentiment to remain weak in early 2024.

US

Wall Street stocks surged on Friday, with the benchmark S&P 500 scaling a fresh record, as investors cheered robust quarterly reports from Meta Platforms and Amazon.

Meta surged 21.5 per cent to hit a record high after issuing its first dividend days ahead of Facebook’s 20th anniversary, along with a revenue and profit beat on robust advertising sales in the holiday shopping period. Other social media firms Snap and Pinterest rose 6.6 per cent and 4.9 per cent respectively.

Amazon jumped 8 per cent following a fourth-quarter revenue beat as new generative AI features in cloud and ecommerce businesses spurred robust growth during the critical holiday period.

Apple lost 0.2 per cent after forecasting a drop in iPhone sales and targeting overall revenue $6 billion below expectations, as its China business took a hit.

Additional reporting: Reuters

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