European shares hit two-month high on hopes of future rate cuts

European shares advanced to more than a two-month high on Thursday, after data showing a drop in inflation on both sides of the Atlantic spurred hopes that central banks will soon be cutting interest rates.

The pan-European Stoxx 600 closed 0.5 per cent higher.

Euro zone data showed inflation slowed to 2.4 per cent year on year in November from 2.9 per cent in October, well below expectations of a fall to 2.7 per cent, while in the US the annual increase in inflation was the smallest since early 2021.

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The Iseq All Share index added 0.9 per cent to 8,355.53, with cardboard box-maker Smurfit Kappa standing out as a strong spot, rising 5 per cent to €34.80.

Housebuilders were also in demand, with Glenveagh Properties rising 2.7 per cent to €1.07, while Cairn Homes advanced 2.1 per cent to €1.27. Brokers in Davy have been pushing Glenveagh’s attractions in particular in recent days.

Banking stocks were generally higher, with AIB gaining 2.6 per cent to €4.25, while Bank of Ireland moved up 0.2 per cent to €8.59.

LONDON

The FTSE 100 rose 0.4 per cent, led by aerospace and defence stocks, while a softer inflation reading in the US and rise in oil prices after Opec+ countries agreed to output cuts boosted sentiment.

Energy stocks also supported the broader gains as oil prices gained after the Opec+ producers agreed output cuts approaching 2 million barrels per day (bpd) for early next year.

Shares of BP and Shell rose 1.5 per cent and 0.3 per cent, respectively, contributing to healthy gains for the benchmark index.

Dr Martens slumped 21.4 per cent after the bootmaker forecast its annual revenue to decline and profit to be below market expectations.

“It’s been another bad day for bootmaker Dr Martens shares which have had a dreadful year, starting off badly in January after the company issued a profits warning... and getting bookmarked today with another profits warning, falling to new record lows today,” said Michael Hewson, chief market analyst at CMC Markets UK.

Metro Bank advanced 2.3 per cent after the UK lender announced it would be laying off 20 per cent of its staff.

EUROPE

Dutch insurance company ASR jumped 13 per cent to top the Stoxx 600 after announcing a final settlement with interest groups concerning unit-linked products for an amount well below expectations. Peer NN Group jumped 9.9 per cent.

Eurazeo climbed 9.7 per cent after the French investment company set out strategic objectives for 2024-2027.

VAT Group rose 4.5 per cent after JP Morgan upgraded the Swiss specialist valve maker to overweight, the equivalent of a “buy”, while Swiss engineering group ABB gained 1.8 per cent after unveiling higher sales and profitability targets.

Elekta shed 7.5 per cent after Barclays initiated coverage on the radiation therapy equipment maker with underweight rating.

NEW YORK

The Dow Jones industrials index hit its highest level in 2023 on Thursday, as Salesforce, the cloud-based software group, jumped on an upbeat profit forecast and a new report offered further evidence of easing inflation.

The personal consumption expenditure (PCE) index – the Fed’s preferred inflation gauge – showed inflation remained unchanged in October on a monthly basis, against economists’ projections of a 0.1 per cent increase.

But most megacap stocks edged lower, with Tesla down leading declines, keeping the S&P 500 and Nasdaq under pressure. Higher US Treasury yields, which make returns on stocks less appealing, weighed on equities.

Data cloud company Snowflake advanced after it forecast fourth-quarter product revenue above Street estimates.

Pinterest and Snap each jumped as analysts at Jefferies upgraded the social media firms to “buy” from “hold”. – Additional reporting, Reuters