European shares flat as investors eye US earnings season

European shares closed little changed yesterday as investors adopted caution ahead of US banking giants kicking off the country’s fourth-quarter earnings season later this week.

The pan-European Stoxx 600 index closed up 0.05 per cent after a mixed session, while the Iseq overall index in Dublin edged 0.3 per cent to 7,667.98.

DUBLIN

Banking stocks were generally higher, with AIB up 2.8 per cent at €1.67 and Bank of Ireland advancing 0.7 per cent to €3.41, as sector followers mulled an upbeat broker report from Deutsche Bank on the sector, which highlighted how Irish banks have been among the most active to book provisions in 2020 for expected Covid-19 bad loan losses. Still, Permanent TSB lost 3.4 per cent to 79c.

Ryanair advanced 0.9 per cent to €15.64 after its chief executive Michael O'Leary told BBC Radio 4 on Monday he expected a jump in people taking overseas holidays this summer as the rollout of coronavirus vaccines accelerates.

Shares soar to record highs on global recovery hopes

---

European stocks rebound as oil, travel stocks jump

---

CRH surge pushes Iseq to fresh pre-financial crash levels

---

Global markets hit record highs on year’s first day of trading

---

LONDON

UK shares dropped as worries about increasing cases of Covid-19 and its impact on the economy coupled with a stronger pound overshadowed a set of upbeat earnings forecasts.

The FTSE 100 fell 0.5 per cent, led by pharmaceutical and household stocks, with consumer goods group Unilever the biggest drag on the index.

The pound jumped to a six-week high, weighing on the export-heavy index, as comments from Bank of England's governor Andrew Bailey on negative interest rates dampened some expectations of sub-zero rates in Britain.

In a rare bright spot, home improvement retailer Kingfisher rose 1.8 per cent to the top of the FTSE 100 after reporting strong trade across its markets.

Ecommerce retailer The Hut Group gained 1 per cent after saying it expects its 2021 revenue to be 30-35 per cent higher than 2020, underpinned by the acquisition of Dermstore. com and a surge in demand for beauty products.

Gambling software maker Playtech jumped 4.3 per cent after saying it expected its 2020 performance to be ahead of expectations, driven by its financial trading arm, and casino, poker, bingo and betting businesses.

EUROPE

European automakers jumped 1.7 per cent to lead gains after Renault, BMW and VW reported 2020 sales. Their US carmaking rivals also got a boost after General Motors announced its entry into the growing electric delivery vehicle business.

Other cyclicals such as banks, travel and leisure and oil and gas extended last week’s rally on hopes that a larger US stimulus under the incoming Biden administration will spur faster economic recovery.

Oil majors BP and Royal Dutch Shell gained close to 2 per cent as crude prices hit an 11-month high on tighter supply and expectations for a drop in US inventories.

Maersk rose 3.4 per cent after brokerage Berenberg upgraded the Danish shipping company's shares to "buy", saying earnings momentum driven by freight prices could see it run higher.

NEW YORK

Oil prices hit their highest in nearly a year yesterday on lower supply bets and Treasury yields tightened from 10-month highs after strong demand at an auction.

Stocks, meanwhile, edged higher, led by Asia, with eyes on US earnings and president-elect Joe Biden’s inauguration next week.

The 10-year US yield touched its highest since March but tightened to near flat on the day after a Treasury auction was well bid. The yield had risen sharply this year on expectations of a massive stimulus package from the incoming Democratic administration.

The Dow rose 60 points, or 0.19 per cent, to 31,068.69, the S&P 500 gained 1.58 points, or 0.04 per cent, to 3,801.19 and the Nasdaq Composite added 36.00 points, or 0.28 per cent, to 13,072.43. – Additional reporting: Reuters