European stocks close above three-month high on Fed, China cheer

Stoxx 600 up 0.9%, scaling highs last seen in August

Europe’s Stoxx 600 index closed above a three-month high on Thursday, as investors cheered US Federal Reserve chair Jerome Powell’s hints of smaller interest rate hikes and China’s decision to soften its tone on strict Covid-19 restrictions.

The pan-European Stoxx 600 index climbed 0.9 per cent to hit its highest since August 17th. It gained 6.8 per cent in November to log its best month since July. Technology stocks helped to boost the index, advancing 2.9 per cent, with traders pointing to some support from US peer Salesforce raising its profit forecast.


The Iseq index closed marginally up in line with its European counterparts. However, after a positive session on Wednesday, linked to the partial lifting of pay restrictions on Bank of Ireland, both AIB and Bank of Ireland fell on Thursday by 2.7 and 2.5 per cent respectively. Permanent TSB was down by 1.7 per cent. The market, however, was buoyed by Ryanair which advanced by 1.6 per cent to more than €13. This comes a day after chief executive Michael O’Leary claimed environmental aviation charges were damaging the connectivity of peripheral states, including Ireland. Smurfit Kappa gained nearly 2 per cent to finish the session at €34.89 per share, while Kingspan added 3.7 per cent to close at €55.42 per share.


“European markets are indeed incorporating the speech from Mr Powell that was well-received by markets already elsewhere. That is a main driver of what we’re currently seeing,” said Bert Colijn, senior economist, euro zone at ING.


Meanwhile, a downturn in manufacturing activity across the euro zone eased in November, according to a survey which suggested that while the bloc’s factories still face a harsh winter, it may not be as bad as initially feared.

UCB slid 6.6 per cent after JP Morgan cut its price target on the Belgian drugmaker’s stock.

Credit Suisse dipped 4.4 per cent to hit a fresh record low. Reuters reported the Swiss lender is looking for ways to accelerate cost cuts announced just weeks ago as client outflows and a slowdown in activity weigh on its revenue outlook


London’s top index handed back some of its recent gains after oil stocks, a resurgent pound and a weak opening for US markets weighed on sentiment.

Mr Powell’s comments on the potential for a dialling down of the pace of rate hikes supported trading at the start of play but positivity faded later in the day.

The FTSE 100 finished the day down 14.56 points, or 0.19 per cent, at 7,558.49. Sterling was buoyed by a knock to the dollar following the Fed chairman’s comments, which impacted currency-sensitive stocks such as Shell and BP.

The pound was up 1.62 per cent against the dollar at 1.225 and was 0.68 per cent higher against the euro at 1.166 at the close.

In company news, City broker Peel Hunt saw shares slide as half-year profits crashed to just £100,000 due to a dearth of deals and flotations on the London market and as economic woes hammered investor confidence.

The group reported pretax profits tumbling 99.7 per cent from £29.5 million a year earlier, with revenues down 42.4 per cent to £41.1 million in the six months to September 30th. Shares were down 4.5p at 78.5p at the close as a result.

Elsewhere, Next edged lower after it bought fashion rival Joules out of administration in a deal alongside the firm’s founder, Tom Joule.

New York

Wall Street slipped on Thursday as a contraction in manufacturing activity last month clouded data showing a mild easing in inflation and solid consumer spending, while a fall in Salesforce shares dragged the Dow lower.

US manufacturing activity shrank for the first time in 2.5 years in November as higher borrowing costs weighed on demand for goods, and proved to be a trigger for investors to book profits following a rally in the previous session.

“Yesterday’s move was so crazy large, this is probably just some natural profit taking,” Rusty Vanneman, chief investment strategist at Orion Advisor Solutions, said.

Markets were boosted earlier on Thursday following a reading from the commerce department, which showed consumer spending, that accounts for more than two-thirds of US economic activity, rose 0.8 per cent after an unrevised 0.6 per cent increase in September.

Most megacap growth stocks such as Alphabet, Apple, Microsoft, Meta Platforms and Tesla were mixed, while 3 per cent gains in Netflix limited falls on the Nasdaq. – Additional reporting: Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times