Investors bet US contraction might mean fewer interest rate rises

Most European markets rose on Thursday, boosted by a slew of upbeat corporate earnings, while weak US economic data eased worries about the future pace of US interest rate hikes. Wall Street’s big indexes reversed course to gain in early afternoon trading.

Dublin

The Iseq rose by 1.36 per cent, as its heavyweight, indigenous multinational stocks all performed strongly. Companies with US exposure gained, despite the contraction in the economy there, as investors bet that interest rate increases might slow.

Building materials giant CRH was ahead by almost 3 per cent to €36.79, although it remains down more than 20 per cent this year on fears for the global economy. Insulation group Kingspan was also up by almost 4 per cent to €60.14.

Paper and packaging group Smurfit Kappa was one of the top stocks on the day, up 5.7 per cent to €35.90, a day after it reported a surge in profits.

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Irish Ferries owner Irish Continental Group fell 2.2 per cent to €3.96, as the price of fuel rose.

London

The FTSE 100 slid into the red following the news that the US economy shrank again. It ended the day down 2.98 points, or 0.04 per cent.

Shell and British Gas owner Centrica both revealed soaring profits as millions of Britons face the prospect of fuel poverty. Shell shares rose by 6.5p to 2,124p after it posted record earnings of nearly £9.5 billion (€11.3 billion) for the second quarter and committed to handing billions of dollars back to shareholders. Centrica, which owns Bord Gáis Energy in Ireland, dipped by 2.14p to 88.84p, despite the group revealing that profits soared fivefold to £1.3 billion and that it would start paying dividends to shareholders.

BT Group was among the day’s weaker performers despite its first sales increase in five years, on the back of customer price increases. Earnings were also in line with expectations but shares closed 14.25p lower at 161.85p after the firm reported that earnings for its enterprise business fell by more than a quarter

Guinness and Gordon’s gin maker Diageo’s latest update proved a tonic for investors, after sales bounced 21.4 per cent on the back of strong demand for luxury spirits.

Europe

The pan-European Stoxx 600 index ended 1.1 per cent higher at 432.77 points, rising for a second straight day, with shares of Ipsen surging 16.2 per cent after the French biopharmaceutical group reported strong results and raised its outlook.

Luxury stocks got a boost from puffer-jacket maker Moncler’s sales-beating expectations. Moncler gained 8 per cent, while Louis Vuitton-owner LVMH rose 4.2 per cent, providing the biggest boost to the Stoxx 600.

However, Spain’s IBEX 35 index fell 0.5 per cent as the euro zone’s second-biggest lender, Santander, slipped after missing profit estimates. Milan’s main stock index jumped 2.1 per cent as upbeat results lifted carmaker Stellantis and chipmaker STMicroelectronics.

Danish group Vestas Wind surged 15.9 per cent after US Democratic senators agreed on a Bill aimed at investments in green energy.

Scor slumped 18.6 per cent after the French reinsurer posted a second-quarter loss due to the impact of Ukraine war and a drought in Brazil.

New York

Facebook-owner Meta Platforms fell 5.8 per cent after posting its first-ever quarterly drop in revenue.

Qualcomm fell 4.6 per cent after warning of difficult economic conditions and a slowdown in smartphone demand could hit its mainstay handset chips business.

Shares of Apple were trading flat, while Amazon.com gained 0.3 per cent in advance of their quarterly reports after market close.

Rising interest rates have hammered shares of mega-cap companies whose valuations depend on future cash flow as it gets heavily discounted. Defensive sectors, including S&P 500 utilities and real estate, gained nearly 3 per cent each, indicating a largely risk-off day of trading.

Ford Motor Company gained 5.5 per cent after reporting a better-than-expected quarterly net income.

(Additional reporting: Reuters/PA)