European stocks rally as banking worries fade

European stocks rose to near three-week highs on Thursday, lifted by upbeat results from retail giant H&M and as fading concerns about the global banking sector fuelled a Wall Street rally.

The pan-European STOXX 600 index rose 1.1 per cent, hitting it strongest level since March 10th, tracking the recovery in global markets. “It’s a combination of easing banking fears and expectation that we are very close to peak rates which is lifting indices,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “With contagion appearing to be contained for now, it’s providing relief for real estate stocks amid hopes that interest rate hikes are nearly at an end.”

Banking stocks rose 1.5 per cent to a one-week high as investors took heart from the sale of failed Silicon Valley Bank’s assets and takeover of embattled Swiss lender Credit Suisse.

Sentiment improved as data showed Spain’s consumer price inflation slowed to 3.3 per cent in March, its weakest annual rate since August 2021 and down from 6 per cent in February.

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Dublin

Reduced concern about the banking sector boosted the Iseq as a whole and boosted AIB and Bank of Ireland themselves, which rose by 3 per cent and 1.4 per cent to €3.75 and €9.46 respectively. Permanent TSB ended the session flat.

Building materials giant CRH rose on the improved economic outlook globally, closing nearly 2 per cent up at €46.14.

There was also good news for builders with Cairn Homes and Glenveagh Properties both up almost 2 per cent at €1.03 and €1 respectively.

Food giant Kerry was marginally up, while rival Glanbia traded down nearly 2 per cent at €13.44.

Ryanair traded broadly flat at €14.74

London

The FTSE 100 continued its string of positive performances this week to strike a new two-week high. Improving consumer sentiment due to hopes of easing inflation led to a rebound for consumer and commercial real estate shares during Thursday’s session. London’s top flight moved 0.74 per cent, or 56.16 points, higher to finish at 7,620.43.

In company news energy group SSE was among the day’s stronger performers after it hiked its annual earnings outlook once again despite lower-than-expected power from renewable generation. The FTSE 100 group, which no longer supplies energy directly to households, said it now expects underlying earnings per share of more than 160p in 2022-23. The group, which had already improved its guidance in January, saw shares lift by 72p to 1,809.5p.

Elsewhere, Moonpig shares increased in value after the online cards and gifts business recorded its biggest week of sales in the UK before Mother’s Day earlier this month. The business also assured investors that trading had been “resilient” over the past six months, despite recently revealing it had taken a hit from Royal Mail postal strikes and waning consumer demand. Shares in the group were up 12.1p at 125.7p.

Ocado had a second strong session of gains as sentiment rebounded following its trading update on Tuesday. The online retail business closed 49.2p higher at 527.2p, swinging to its highest for three weeks.

Europe

“Core inflation – as evidenced from the regional prints we got today – is rising, and this will be concerning for the ECB,” said Stuart Cole, head macro economist at Equiti Capital. “The ‘hawks’ on the governing council will argue that underlying price growth demands a robust monetary response; the ‘doves’ will claim that it is the overall headline measure that is being targeted and which is calling for a more cautious approach,” he said.

H&M climbed 16.3 per cent to lead gains in the Stoxx 600 after the world’s second biggest fashion retailer reported a surprise operating profit for the December-February period. The wider retail index rallied 3.7 per cent.

Danish wind turbine maker Vestas climbed 5.2 per cent after it won an order in Brazil.

Dutch health technology firm Phillips rose 5.9 per cent after its chief executive Roy Jakobs told Dutch financial daily FD the company expected to reach settlements this year related to its global recall of respiratory devices.

New York

Stock indexes rose and the dollar declined on Thursday on easing fears about banking sector troubles, encouraging economic signs from the chip industry and rising oil prices. Two-year Treasury yields rose to a one-week high as investors grew more confident that recent stress in the banking sector would be contained, but remained cautious about the impact that recent bank failures would have on the economy.

Among equities indexes, the Dow Jones Industrial Average rose 34.91 points, or 0.11 per cent, to 32,752.51, the S&P 500 gained 14.85 points, or 0.37 per cent, to 4,042.66 and the Nasdaq Composite added 68.98 points, or 0.58 per cent, to 11,995.21.

The chip sector also extended Wednesday’s gains as falling inventories at Micron Technology were seen as an encouraging sign for the sector as well as the broader economy. “If inventories have come down for semiconductors that stands to reason it may have come down for many other products as well,” said Kleintop, who added that this “feeds right into economic growth.” - Additional reporting by Reuters