European shares closed at record high as banking and defence stocks gain

European shares closed at a record high on Tuesday, with banking and defence stocks among top gainers as investors priced in the likelihood of increased domestic military spending against a backdrop of peace talks to end the Russia-Ukraine conflict.

The defence sector gained 0.8 per cent, advancing for the eighth straight session. On Monday, it surged 4.6 per cent, which was its biggest one-day rise since Russia’s invasion of Ukraine in February 2022.

Dublin

The Iseq closed 0.4 per cent higher, although gains were kept in check by falls for Ryanair and Kerry. The airline slipped 0.5 per cent to €20.45, while food group Kerry fell 1.8 per cent to €96.65.

Bank of Ireland, which had lost ground on Monday after a landmark UK court ruling related to car loans to which it has some exposure, bounced back on Tuesday, rising 4 per cent to €10.17. AIB added 1.7 per cent to finish at €6.28 amid positive sentiment towards banking stocks.

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Building materials group Kingspan rose 0.7 per cent to €69.50.

London

The UK’s FTSE 100 closed flat, with banking stocks helping keep overall losses in check, while mid-cap shares slipped 0.3 per cent as investors trimmed bets on interest rate cuts after data showed a pickup in wage growth.

Bank stocks were up 1.5 per cent, with HSBC rising about 2 per cent to an over two-decade high as investors cheered the Asia-focused lender’s restructuring efforts.

InterContinental Hotels Group lost 4.5 per cent, the top decliner on the FTSE 100, after the Holiday Inn owner announced a $900 million share buyback plan which fell short of some investors’ estimates.

BT Group fell 2.9 per cent after Citi double-downgraded the mobile and broadband operator’s stock to “sell” from “buy”.

Europe

The pan-European Stoxx 600 index rose 0.3 per cent, with Germany’s main stock index up 0.2 per cent, also an all-time high.

German mid-cap stocks also edged up 0.5 per cent to finish at levels not seen since August 2023 ahead of upcoming elections. Yields on euro zone bonds ticked higher, aiding a 1.9 per cent rise in banks that led sectoral gains.

Defence stocks gained 0.8 per cent, with Leonardo up 2.1 per cent, Sweden’s Saab rising 0.6 per cent and France’s Thales adding 2.3 per cent.

Germany’s Thyssenkrupp, which is planning to spin off its warship division, advanced 7 per cent after a nearly 20 per cent surge on Monday.

Among other stocks, Capgemini slid 10.2 per cent after the French IT consulting giant reported a 2% annual decline in sales, though it surpassed expectations.

New York

Wall Street was subdued in early trading as investors watched for signs of escalation in US trade restrictions and awaited minutes of the central bank’s January meeting to gauge its policy stance following last week’s mixed economic data.

Seven of the S&P 500’s 11 sectors traded higher, with energy adding nearly 1 per cent, while a 3.1 per cent drop in UnitedHealth weighed on the blue-chip Dow.

Retail giant Walmart’s earnings, a bellwether for how the American consumer is faring, are due later this week.

Mega-cap and growth stocks were mixed, with Nvidia leading gains as it rose 1.7 per cent, while Meta Platforms dropped 2.4 per cent, on pace to snap a 20-day winning streak if losses hold.

Intel gained 9.5 per cent after a report over the weekend said rivals Taiwan Semiconductor Manufacturing Co and Broadcom was each eyeing potential deals that could break the chipmaking icon in two.

Constellation Brands added 5 per cent after Warren Buffett’s Berkshire Hathaway disclosed a new investment in the alcoholic beverages producer on Friday.

Additional reporting: Reuters