European shares rise amid hopes ECB will cut interest rates in 2024

European shares rose on Wednesday as German shares rallied. Better-than-expected inflation data in the euro zone’s largest economy boosted hopes that the European Central Bank (ECB) will cut interest rates next year, while Italian stocks neared their highest level since 2008.

Dublin

The Iseq edged up about 0.1 per cent in the session, with a near 3 per cent gain for Smurfit Kappa just about dragging the index into positive territory. The packaging group climbed 2.9 per cent to €33.15. Kingspan was another key stock that advanced on the day, with the building materials company closing 2.1 per cent higher at €71.30.

Ryanair added 0.7 per cent, finishing at €17.58. But Paddy Power owner Flutter Entertainment dropped 1 per cent to €143.75, while food group Kerry declined 1.2 per cent to €73.78.

AIB was also among the fallers, dropping 1.3 per cent to close the day at €4.15.

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London

Britain’s FTSE 100 slipped for the third straight day following hawkish comments from Bank of England governor Andrew Bailey. The blue-chip FTSE 100 index dipped 0.4 per cent and the domestically focused mid-cap index added 0.4 per cent.

Bailey said that the central bank “will do what it takes” to get inflation down to its 2 per cent target, adding that he had not yet seen enough progress towards that goal to be confident.

Insurance heavyweight Prudential slipped 3.5 per cent after Deutsche Bank reduced its price target on the stock. Aviva also dropped 2.1 per cent after the bank downgraded the stock to “hold” from “buy”.

Banks slipped 1 per cent following a 3.3 per cent slip in Standard Chartered.

Precious metal miners added 2.6 per cent as gold prices continued surging and expectations that the US Federal Reserve may cut interest rates by the first half of next year boosted the outlook.

Pets at Home Group jumped 5.1 per cent after the retailer forecast like-for-like retail sales growth in advance of Christmas.

Europe

The continentwide benchmark STOXX 600 index rose 0.4 per cent, with rate-sensitive real estate and technology stocks rallying over 1.5 per cent each.

The German DAX rose 1.1 per cent to touch a four-month high after data showed German inflation eased more than expected in November, while Italy’s blue-chip index, the FTSE MIB, gained 1.1 per cent.

The Italian index hit its highest level since August and closed in on highs last seen in 2008, about two weeks after ratings agency Moody’s lifted the country’s debt outlook to stable.

Stellantis jumped 5.1 per cent to the top of the Italian index after US peer General Motors outlined a share buy-backs plan.

Philips fell 3.7 per cent after the US Food and Drug Administration said it was alerting patients about a safety issue with the Dutch healthcare technology company’s machines used for the treatment of obstructive sleep apnoea.

Siltronic jumped 9 per cent after analysts at Berenberg upgraded the German chip equipment supplier to “buy” from “hold”.

European bond yields fell, with the benchmark 10-year German bond yield falling to a more than three-month low of 2.4 per cent.

US

Wall Street’s three main indexes were muted at midday after a strong start to the session. Most megacap stocks reversed course, with Meta Platforms, Microsoft and Alphabet down between 1 per cent and 2 per cent.

Meanwhile, the latest GDP data showed the US economy in the third quarter grew faster than initially thought, adding to the narrative of the Federal Reserve managing to avoid a recession.

General Motors rose 9.3 per cent as the automaker said it will buy back $10 billion in shares and boost its dividend by 33 per cent. Shares of rival Ford also rose 2.5 per cent.

– Additional reporting: Reuters