Markets buoyed by easing trade relations and Brexit ‘breakthrough’

European shares recovered on Tuesday as hopes for an easing of the Sino-US trade war and an imminent Brexit deal chased away the previous session’s fears of a peak in tech stocks.

The pan-European Stoxx 600 rose 0.7 per cent in a broad-based recovery, with Germany’s Dax up 1.3 per cent as investors turned to some strong results and tech stocks recovered.

On Tuesday nerves about a messy Brexit were alleviated by signs a divorce agreement between Britain and the EU was imminent, sending sterling to a 6½-month high against the euro.

DUBLIN

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The Iseq rose marginally to 6,138, underperforming its European peers. Shares in Swiss-Irish food group Aryzta rose 6.5 per cent to €1.29. The beleaguered firm plans to raise €800 million through a rights issue to pay down part of its €1.6 billion debt pile and strengthen its balance sheet.

Property company Hibernia Reit's shares rose on news that the value of its properties increased almost 4 per cent to €1.33 billion in the six months to September 30th. The news came as the Dublin-listed company confirmed that it had let one of its new developments, 1 Sir John Rogerson's Quay, to software multinational Hubspot. Its shares closed the session up 1 per cent at €1.37.

Ryanair rose 1 per cent to €12.81, regaining lost ground from the previous session, while Smurfit Kappa fell 3.7 per cent to €25.60. Bank of Ireland enjoyed the general lift for financials across Europe, rising 3 per cent to €6.37, but rival AIB fell marginally to €3.86.

LONDON

The UK's top share index finished broadly flat on Tuesday after sterling strength on Brexit deal hopes weighed on exporters, offsetting gains for Vodafone, Experian and Melrose Industries. The FTSE 100 index was up a marginal 0.01 per cent, paring gains as sterling climbed to a 6½-month high versus the euro after the cabinet office minister said there could be a Brexit deal in the next 24-48 hours.

The buoyant pound meant the blue-chip index underperformed its European peers, with the leading euro zone stock index closing with a 1 per cent gain. More pressure could be on the cards on Wednesday as the pound extended those gains after trading closed on a report that British and European negotiators had agreed on a Brexit text.

Vodafone shares rose 7.8 per cent to the top of the FTSE 100 and their highest in a month after its new chief executive Nick Read said he would reduce operating costs by €1.2 billion by 2021 and review its tower assets to drive higher returns. The group showed it was operating generally in line with analysts' forecasts and said it would freeze the dividend until it reduced its debt pile, easing worries over a possible cut.

Gains in banks also helped the FTSE 100 to eke out small gains, with shares in Barclays up 2.8 per cent and HSBC up 1.5 per cent. Oil companies declined as crude prices fell sharply after US president Donald Trump put pressure on Opec not to cut supply. BP was down 2.8 per cent.

EUROPE

A report that China's top trade negotiator was preparing to visit the US ahead of a meeting between the leaders of the world's two largest economies buoyed sentiment on trade. Europe's tech sector jumped 1.7 per cent, having tumbled sharply in the previous session when Wall Street's tech stocks sank on fears that sales of Apple's iPhone have peaked. Bank of America Merrill Lynch's monthly fund manager survey found the leading US and Asian tech stocks, known by their FAANG and BAT acronyms, are still considered the most crowded trade globally.

Bayer shares opened higher but finished 2.9 per cent lower at the bottom of the Dax as investors focused on the German pharmaceutical group's more cautious outlook.

Ambu, a Danish producer of single-use medical devices, was the biggest faller, down 14 per cent after its results showed lower-than-expected sales of endoscopes.

Swedish snuff and cigar maker Swedish Match fell 7.4 per cent, with traders citing reports that the FDA is planning regulation actions on flavoured cigars.

NEW YORK

US stocks rose in choppy trading on Tuesday as a bruised technology sector recovered and industrial stocks gained on hopes of a US-China trade deal, but declines for Boeing and Home Depot weighed on the Dow.

The S&P technology index gained 1.2 per cent, and shares of Apple rose 0.4 per cent following a 5 per cent slump on Monday even as Goldman Sachs cut its earnings estimates that came after several suppliers to the iPhone maker warned of an earnings hit.

Traders also pointed to a report on China’s top trade negotiator preparing to visit the US before a meeting between the leaders of the world’s two largest economies at the end of November for easing some pressure on the markets.

The trade-sensitive industrial sector rose 1.3 per cent, boosted by shares of Caterpillar and 3M . – Additional reporting by Reuters