Business

European shares advance on tech results and China stimulus

Bank stocks edge higher on Iseq

Shares in LVMH, parent of fashion house Louis Vuitton, advanced as investors in luxury companies cheered a fresh stimulus plan in the key market of China. Photograph: Manaure Quintero/Bloomberg

Joe Brennan
Wed Jan 24 2024 - 18:52

European shares pushed higher on Wednesday on the back strong earnings from German software group SAP and Dutch supplier to chipmakers ASML Holdings, and as investors cheered fresh stimulus from China to support the world’s second-largest economy.

China’s central bank said it would cut the amount of cash that banks must hold as reserves from early next month, as policymakers extend efforts to shore up an economy that grew last year by just over 5 per cent, the slowest pace in three decades, excluding the pandemic years.

The pan-European Stoxx 600 index closed 1.2 per cent higher to reach a one-week high.

Dublin

The Iseq All Share index added 0.7 per cent to 8,972.71. Banking stocks were higher, with AIB gaining 1.5 per cent to €4.02, Bank of Ireland nudging up 0.5 per cent to €8.24 and PTSB soaring 2.4 per cent to €1.69.

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Overall activity in Dublin was affected after Tuesday marked the last day of trading of Flutter on the market, in advance of the Paddy Power parent’s delisting next Monday as its main quotation moves to New York.

Cairn Homes dipped 0.4 per cent to €1.45, taking a breather from a strong run that saw the housebuilder’s stock reach a four-year high on Tuesday. Peer Glenveagh Properties dipped 0.7 per cent.

London

Tullow Oil, the Irish-founded explorer, stood out among the top gainers on FTSE 250 in London, rising 10.7 per cent, on the back of company guidance for strong cash flow over the next two years.

The exporter-heavy FTSE 100 ended 0.6 per cent higher, while the domestically-oriented FTSE 250 index added 0.9 per cent.

Industrial metal miners rose 2.6 per cent as a result of the Chinese central bank’s intervention in the economy.

Miners Antofagasta, Glencore and Anglo American climbed between 3 per cent and 5.3 per cent, leading gains on the FTSE 100.

Asia-exposed insurer Prudential was up 2.2 per cent, while luxury retailer Burberry added 3.7 per cent, lifting the personal goods index 2.5 per cent on hopes of a demand refresh from China.

Precious metal miners surged 4.7 per cent, after broker Liberum upgraded its rating on stocks in the sector, saying gold equities will shine this year amid global war and trade tensions if Donald Trump wins the US presidential race in November.

Bucking the trend, pest control company Rentokil was the top decliner on FTSE 100, down 2.3 per cent, after BofA Global Research downgraded the stock.

Europe

ASML Holding soared 9.7 per cent after beating fourth-quarter earnings estimates and posting its best quarterly orders. Amsterdam’s AEX index gained 2.4 per cent to hit an over two-year high.

Shares of SAP added 7.6 per cent, touching a record high, after the company’s 2023 operating profit beat analysts consensus and announced a restructuring plan for 2024 that will affect 8,000 roles, in a push towards artificial intelligence.

The two stocks led gains in the European technology sector, lifting the index 4.8 per cent to its highest level in over more than two years.

Shares of China-exposed luxury firms including LVMH, Kering and Richemont were up between 1.3 per cent and 1.9 per cent.

Meanwhile, a survey showed the downturn in euro-zone business activity eased in January, but an improvement in the manufacturing outlook was partly offset by a steeper decline in the bloc’s dominant services industry.

The data comes in advance of the European Central Bank’s policy verdict on Thursday, where it is widely expected to hold interest rates at current levels.

New York

Wall Street rallied on Wednesday, with the benchmark S&P 500 scaling record intraday levels, as Netflix surged after smashing expectations for subscriber growth and chip stocks gained on ASML’s strong earnings.

Riding on the optimism, Microsoft rose to a record high, with its market value surpassing $3 trillion (€2.75 billion) for the first time.

Megacaps such as Alphabet, Amazon.com and Meta Platforms rose.

Chip stocks Nvidia, Advanced Micro Devices and Broadcom gained after ASML Holding beat fourth-quarter earnings estimates and posted record-high quarterly orders. – Additional reporting: Reuters

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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