Europe’s benchmark stock index closed on a subdued note on Monday as energy shares dropped on weak oil prices and offset gains in industrials, while investors were on guard as they watched out for developments in the Middle East.
The pan-European Stoxx 600 ended 0.1 per cent higher. Industrials and automobiles rose 0.8 per cent and 0.7 per cent respectively after the Ifo economic institute said German manufacturers were no longer acutely affected by material shortages, with the supply situation almost back to how it was before the Covid-19 pandemic.
Investors were on the look out for any developments in the Middle East after Iran launched a retaliatory attack on Israel over the weekend, raising the threat of a wider regional conflict. European defence stocks advanced 0.8 per cent, in line with their US peers.
“The EU’s trade exposure to Iran is small.. but the continued escalation of geopolitical tensions will likely lead to more expensive supply chain protection and thus higher oil prices,” Citi analysts wrote.
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DUBLIN
Dublin’s Iseq traded marginally up on the day at 9,898.35 in tandem with other European indices. It was a mixed bag in terms of individual stocks with AIB up 2.25 per cent and Bank of Ireland down 0.8 per cent. The third domestic banking force, Permanent TSB, was up 3 per cent.
Food giants Glanbia and Kerry Group were both on the back foot as the sector mulled the prospect of interest rates in the US and other jurisdictions remaining higher for longer. Glanbia closed the session down 0.5 per cent at €17.52, while Kerry was down 0.75 per cent at €79.90. Ryanair traded flat at €20.28 amid the ongoing oil price volatility linked to tensions in the Middle East.
EUROPE
Energy-related shocks have been a strong factor driving inflation in Europe and globally. However, oil prices fell over 1 per cent as the market downplayed the risk of broader regional conflagration after Iran’s attack, pushing energy stocks down 1.5 per cent.
Providing some relief, policymaker Gediminas Simkus said the ECB could deliver over three rate cuts this year, while other officials, including Olli Rehn, Peter Kazimir and Francois Villeroy de Galhau, acknowledged the central bank’s progress on inflation.
European shares have been on a record-breaking drive since 2023 end, thanks to investors’ growing confidence around monetary policy easing this year and excitement around artificial intelligence.
Luxury giants including LVMH, Hermes and Richemont gained over 1 per cent each, with the broader luxury sector also rising 1%, after hitting a near two-month low on Friday. The earnings season is set to pick up steam with results from LVMH, Nokia, Ericsson and ASML due through the week.
Among headlining stocks, Temenos jumped 19.5 per cent after a special committee appointed by the financial software company said allegations made by Hindenburg Research were “inaccurate and misleading”. Adidas rose 4.2 per cent after brokerage Morgan Stanley double-upgraded the German sportswear maker to “overweight” from “underweight”.
LONDON
UK stock markets lagged behind their international peers on Monday as the FTSE 100 was dragged down by miners and energy giants in a reversal of Friday’s industrial-fuelled rally. The FTSE 100 closed 30.05 points lower, or 0.38 per cent, to 7,965.53.
It came after the blue-chip index came just a few points away from hitting a new all-time high on Friday, amid surging gold and oil prices. But oil prices dropped on Monday as investors continued to weigh up the possibility of conflict in the Middle East escalating following Iran’s missile and drone attack on Israel over the weekend.
In company news shares in Inchcape moved higher after the firm said it was selling its UK retail operations for about £346 million to US-based rival Group 1 Automotive. Its boss said the “strategic importance of the UK retail operations has become limited” as a result of the group growing internationally. Shares in the London-listed company were 4.1 per cent higher at close.
Shares in PageGroup fell on Monday afternoon after the recruiter revealed further trading woes and more job cuts, with profits down in recent months.
NEW YORK
The Dow outpaced Wall Street peers on Monday, while rising Treasury yields following stronger-than-anticipated retail sales data kept gains in check. Goldman Sachs gained 3.1 per cent after its first-quarter profit beat Wall Street estimates, fuelled by a recovery in underwriting, deals and bond-trading that lifted its earnings per share to the highest since late 2021.
Apple fell 0.8 per cent after data from research firm IDC showed the company’s smartphone shipments dropped about 10 per cent in the first quarter of 2024.
Tesla will lay off more than 10 per cent of its global workforce, an internal memo seen by Reuters showed. Shares of the EV maker were last down 3 per cent.
Salesforce shed 5.5 per cent after Reuters reported, citing a source, that the customer relations software maker was in advanced talks to acquire Informatica. – Additional reporting by Reuters
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