Business

European shares drop as investors fret about tension in Middle East

Banking stocks out of favour as Iseq All Share index declines and IMF warns of likelihood of central banks raising rates

Bootmaker Dr Martens slumped 29.4% to a record low after it named a new chief and flagged a challenging fiscal 2025 on weak US demand. Photograph: iStock/Getty

Joe Brennan
Tue Apr 16 2024 - 18:38

European shares declined on Tuesday as investors stuck to the sidelines while they monitored heightened tensions in the Middle East.

The International Monetary Fund (IMF) warned that central banks globally, which have been on track to cut borrowing costs, may have to raise rates if the crisis triggered a sharp surge in oil prices.

The pan-European STOXX 600 closed 1.6 per cent down, touching its lowest level since March 7th, in a broader market decline. Higher euro zone bond yields also pressured equities.

Dublin

The Iseq All Share index declined by 1.2 per cent to 9,778.52.

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Banking stocks were out of favour, with Bank of Ireland sliding 2.5 per cent to €9.45, while AIB declined by 0.6 per cent to €4.88 and PTSB lost 0.7 per cent to €1.54.

Smurfit Kappa dropped 2.4 per cent to €40.22, as sector followers weighed US-based International Paper’s deal to buy the UK’s DS Smith in a £5.8 billion (€6.8 billion) all-stock deal. Smurfit is currently planning to merge with US rival WestRock, with that transaction expected to close in July subject to shareholder and other necessary approvals.

Ryanair dipped 0.8 per cent to €20.12 as airline investors monitor developments on the global oil markets.

Dalata Hotel Group declined by 1.3 per cent to €4.15, failing to glean any fresh interest after Italian hedge fund Helikon Investments disclosed that it had increased its stake to 5.4 per cent from 4.1 per cent previously.

London

The FTSE 100 bumbled 1.8 per cent, with its broadest sell-off in years, on growing geopolitical tensions in the Middle East and reduced expectations of US interest rate cuts, while a slide in Dr Martens exacerbated losses.

Bootmaker Dr Martens slumped 29.4 per cent to a record low after it named a new chief executive and flagged a challenging fiscal 2025 on weak US demand. The news pushed the personal goods sector to a 14-year low, falling 5.7 per cent.

Superdry tumbled 23.8 per cent after it launched a turnaround plan that included an equity raise that would take the fashion chain private.

Recruiters Hays and Robert Walters dropped 4.3 per cent and 4.9 per cent, respectively, following a drop in their quarterly net fees, weighed down by low client and candidate confidence in big markets amid sluggish hiring conditions.

Europe

Banks lost 2.6 per cent, their biggest one-day drop since August, dragged down by 3 per cent declines in Britain’s HSBC and the euro zone’s largest bank, BNP Paribas.

Among other sectors, automobiles, insurance and energy also lost around 2 per cent each.

Main indexes in Germany, France, Italy and Spain shed more than 1 per cent each, tracking a global risk-off mood as the world awaited Israel’s response to Iran’s first-ever direct attack against the country.

“There are upside risks relating to Middle East tensions and these will add to central banks’ caution, but we still see the ECB and Bank of England cutting rates from June,” Capital Economics chief global economist Jennifer McKeown wrote.

The world’s second-largest steelmaker, ArcelorMittal, slumped 6.9 per cent following a Deutsche Bank rating downgrade to hold from buy.

Fresenius gained 4.6 per cent after the German healthcare firm announced the launch of Tyenne in the US for treating chronic autoimmune diseases.

Naturgy rose 3.4 per cent after holding vehicle Criteria confirmed discussions with a potential investment group regarding the Spanish energy firm.

New York

The Nasdaq and the S&P 500 were muted in early afternoon trading as higher Treasury yields pressured equities, though the blue-chip Dow bucked the trend on robust results from health insurance heavyweight UnitedHealth.

Dow component UnitedHealth Group advanced after the health insurer beat expectations for first-quarter adjusted profit.

Morgan Stanley advanced after beating first-quarter profit estimates, fuelled by a resurgence in investment banking.

Bank of United States fell after the lender reported a drop in first-quarter profit as it set aside more money to cover souring loans.

Johnson & Johnson slipped as the drugmaker’s first-quarter revenue missed analysts’ estimates after sales from its blockbuster psoriasis drug, Stelara, fell short of expectations.

– Additional reporting: Reuters

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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