Shares gain as optimism offsets rate hike fears

European shares rose on Friday, boosted by gains in healthcare and energy firms, as optimism over the outlook for the region’s economy overshadowed concerns about US interest rates staying elevated for longer than expected.

Dublin

The Euronext Dublin was marginally off, bucking the wider European trend. The index was dragged down by declines in some heavyweight stocks, with CRH shares down 0.9 per cent to €43.80. Glanbia also suffered losses, falling 1.76 per cent over the day to close the week at €11.17.

Shares in Ryanair shed 1.7 per cent to end at €15.25, while Paddy Power-owner Flutter Entertainment was also hit, declining 1.4 per cent to close at €148.20.

At the other end of the market, bank shares rose, with AIB surging more than 3 per cent over the day, and Bank of Ireland gaining 1 per cent. Permanent TSB was up 1.4 per cent.

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Also closing the day in positive territory was Glenveagh Properties, which added 3.5 per cent over the session and ended at just over €1. Packaging giant Smurfit Kappa saw its shares rise 1.3 per cent, to reach €40.17.

London

The FTSE 100 hit a new record high during Friday’s session as investors were cheered by receding fears over global inflation and interest rates. On Friday the index had briefly pushed as high as 7,906.58, before falling back to 7901.80 by the close of the session. The previous record intraday high came in May 2018, when the FTSE 100 reached 7,903.5 points, while its all-time high close was 7,877.45.

The domestically-focused FTSE 250, which contains smaller- to middle-sized companies, closed 0.1 per cent lower on Friday.

Discount retailer B&M gained 3.4 per cent and Marks & Spencer rose 1.2 per cent after Deutsche Bank upgraded their stocks to “buy” from “hold”, saying the outlook for retailers is getting less “chilly”.

Nanoco Group slumped 26.6 per cent after the nanotechnology company provided a half-year trading update and said it agreed to a $150 million litigation settlement with Samsung Electronics.

Europe

The pan-European STOXX 600 reversed early losses and ended up 0.3 per cent at its highest since April last year. The index notched gains for the second straight week. European equities rallied in the previous session on hopes that the global rate-hiking cycle was close to an end, even as the European Central Bank (ECB) stayed hawkish.

In the euro zone business activity bounced back to growth in January, suggesting the bloc’s economy might again escape a contraction this quarter and that the upturn might accelerate. Another report showed euro zone producer prices decelerated year-on-year in December.

Healthcare stocks led gains on the STOXX 600, rising 1.5 per cent on a boost from shares of large drugmakers such as Novo Nordisk and Roche Holding. However, French drugmaker Sanofi fell 1.9 per cent after forecasting moderate 2023 earnings growth.

Energy stocks jumped 1 per cent, tracking crude prices higher as investors weighed demand recovery in top consumer China while some consumer staple stocks also lent a boost to the Stoxx 600.

Dutch navigation and digital mapping company TomTom jumped 4.6 per cent after raising its 2023 guidance.

Spain’s Caixabank fell 2.7 per cent as higher loan loss provisions overshadowed the Spanish bank’s full-year results.

Casino fell 3.6 per cent after analysts flagged that talks with Teract to combine French retail activities would not address the supermarket group’s urgent need to slash debt.

New York

A gauge of global stocks slumped while US Treasury yields and the dollar shot higher on Friday after a surprisingly strong US jobs report rekindled concerns the Federal Reserve may need to stay aggressive in its rate hike path in order to tame inflation.

US stocks opened lower after the report, with additional downward pressure being supplied by a 1.01 per cent decline in Google parent Alphabet and a 5.46 per cent drop in Amazon after their quarterly results.

Apple, however, helped curb declines, erasing losses in premarket trading to trade 3.52 per cent higher following its quarterly earnings.

Other data showed the US services industry rebounded strongly in January, according to the Institute for Supply Management (ISM).

The Dow Jones Industrial Average fell 13.97 points, or 0.04 per cent, to 34,039.97, the S&P 500 lost 15.18 points, or 0.36 per cent, to 4,164.58, and the Nasdaq Composite dropped 51.84 points, or 0.42 per cent, to 12,148.98. – Additional reporting: Reuters, Bloomberg