European shares end higher, lifted by healthcare and bank stocks

European shares ended higher on Monday, with healthcare and bank stocks in the lead as investors awaited key US inflation data later this week for fresh clues on the Federal Reserve’s monetary policy path.

The pan-European Stoxx 600 index rose 0.4 per cent even as gains on Wall Street faded after a few disappointing earnings reports.

The European equities benchmark came under pressure last week when the European Central Bank, unlike the Fed, signalled that more interest rate hikes were on the cards as inflation across the 20 countries that share the euro remains stubbornly high.

The focus is now on US consumer prices reading for April due on Wednesday for hints on whether rate cuts in the world’s largest economy are coming soon. The Fed raised rates last week in an action that may be the last of its current tightening campaign.

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“We expect another month of discouraging CPI prints,” economists at BNP Paribas wrote in a note.

“Fed officials will likely be wary in acknowledging progress on the inflation front, so as not to be caught offside by yet another false dawn. Policymakers will likely need to see several more months of sustained improvement before they begin softening their inflation assessment.”

Dublin

Positive sentiment in favour of banks saw both AIB and Bank of Ireland rise. AIB was up nearly 2 per cent at €3.90, while Bank of Ireland was up nearly 4 per cent at €9.26. Permanent TSB was something of an outlier, falling 0.85 per cent to €2.34.

Cairn Homes and Glenveagh bucked some negative industry sentiment for property internationally both rising. Cairn was up 0.8 per cent while Glenveagh was up 4.5 per cent. Despite rises in oil prices, Ryanair shares were up 1.5 per cent at €15.11. Better-than-expected news regarding the US economy – it added 253,000 jobs in April, powering the economy through turmoil, boosted Irish stocks with big US operations including insulation maker Kingspan, which rose by 1.3 per cent to €62.20. Paddy Power Betfair owner Flutter also rose by 2.2 per cent.

London

Stock markets in London were closed for a holiday on Monday following the coronation of King Charles on Saturday.

Europe

Banks and healthcare rose about 0.8 per cent each, leading sectoral gains in Europe, while real estate shares slid 0.7 per cent.

Swedish landlord SBB plummeted nearly 20 per cent after S&P Global cut its long-term credit rating to junk on concerns over its liquidity position.

Germany’s Dax index slipped 0.1 per cent, lagging other regional markets in Europe, after data showed German industrial production fell more than expected in March, partly due to a weak performance by the automotive sector.

Among other movers, PostNL jumped 10.2 per cent as the Dutch postal firm affirmed its 2023 outlook after reporting a smaller-than-expected drop in first-quarter parcel volumes. Spanish pharmaceutical firm Almirall inched up 0.2 per cent after its first-quarter core earnings beat analysts’ estimates.

New York

Wall Street’s main indexes inched lower on Monday as Tyson Foods and Catalent led falls on the benchmark S&P 500 ahead of a key inflation reading this week, while a rebound in regional lenders ran out of steam by midday trading.

Shares of Catalent tumbled 26.6 per cent as the contract drug manufacturer saw lower revenue and core profit in 2023, while Tyson Foods dropped 15.6 per cent on posting a surprise second-quarter loss and cutting its annual revenue forecast.

Also weighing on the main indexes was a 1.1 per cent decline in shares of Microsoft, while Apple was flat after rising 4.7 per cent on Friday following upbeat results.

“Growth stocks are down on nothing other than a mild profit-taking, given the strong move that we saw last week,” said Michael James, managing director of equity trading at Wedbush Securities.

The spotlight this week, however, will be on the labour department’s inflation reading on Wednesday, which is expected to show the consumer price index (CPI) likely climbed 0.4 per cent in April after gaining 0.1 per cent in March. Producer prices, weekly jobless claims and consumer sentiment data are all lined up through the week. – Additional reporting: Reuters