European shares pause for breath after gains last week

Banking stocks in focus, with AIB and Bank of Ireland down 0.7% each as sector followers speculate on rates

European shares dipped on Monday as they paused for breath after a strong showing last week, with miners and energy among the weakest performers as they were hurt by weak commodity prices.

The pan-European Stoxx 600 slipped 0.1 per cent, after touching a fresh four-month high in early trade and posting its third straight weekly gain on Friday.

DUBLN

The Iseq declined by 0.4 per cent to 8.431.07. Banking stocks were in focus, with AIB and Bank of Ireland declined by 0.7 per cent each to €4.33 and €8.56, respectively, as sector followers continued to speculate on where interest rates are headed.

European Central Bank vice-president Luis de Guindos said on Monday that while a drop in euro zone inflation last month to 2.4 per cent (compared to a peak of 10.6 per cent in late 2022) was a “positive surprise”, any future decisions on interest rates will depend on reality on the ground.

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Ryanair edged 0.2 per cent higher to €18.05 as the carrier reported that its passenger traffic increased by 4 per cent in November.

LONDON

The FTSE 100 eased by 0.2 per cent as heavyweight energy and mining stocks fell after a stronger dollar and concerns about China’s economy dragged down oil and metal prices.

Energy giants Shell and BP fell more than 1 per cent as oil prices dipped, pressured by investor scepticism over the latest Opec+ decision on supply cuts and uncertainty surrounding global fuel demand.

London-listed miners such as Glencore, Rio Tinto and Anglo American slid 2.7-3.7 per cent as copper prices fell against a firm dollar, with further pressure coming from an increase in stocks in London Metal Exchange warehouses and resurfacing doubts over Chinese demand prospects.

Shares of Rolls-Royce rose 3.1 per cent to touch a more than four-year high after JP Morgan upgraded the engineering firm to overweight — the equivalent of a buy recommendation — from neutral.

888 Holdings jumped 19.1 per cent to the top of the FTSE 250 index on a report the bookmaker rejected a £700 million (€816 million) buyout offer from Playtech in July.

EUROPE

Europe’s Stoxx 600 has risen nearly 10 per cent year-to-date, underperforming the US benchmark S&P 500′s near-20 per cent jump, which was also aided by strong enthusiasm around artificial intelligence stocks and better-than-expected third-quarter earnings.

“Growth in the US is still above average, whereas in Europe, we’re talking about contraction or, at best, a stagnation,” said Ipek Ozkardeskaya, senior market analyst, Swissquote Bank.

Among individual stocks, Nokia fell 6.5 per cent, with an analyst pointing to market speculation indicating AT&T may remove the Finnish provider of mobile network technology from its vendor list.

Roche gained 2.8 per cent after agreeing to take over obesity drug developer Carmot Therapeutics for $2.7 billion (€2.5 billion).

Chipmaker ASM International fell 6.4 to the bottom of Stoxx 600, dragging tech stocks 0.8 per cent lower.

Meanwhile, Greece’s 10-year government bond yield – or market interest rate – touched its lowest level (3.57 per cent) since June after rating agency Fitch upgraded its sovereign rating to investment grade.

NEW YORK

Wall Street shares were also lower in early afternoon trading, after rallying last week, on caution ahead of a slew of economic data due this week that will likely put to test the narrative of the Federal Reserve cutting interest rates by early next year.

Shares of Alaska Air Group dropped after the carrier said on Sunday it would acquire peer Hawaiian Holdings for $1.9 billion, including debt. Hawaiian’s shares nearly tripled in value.

Analysts have, however, alluded to the possibility of a Santa Claus rally as equities rebound from a likely mid-December low due to tax-loss harvesting — a process in which investors sell underperforming stocks to lock in tax benefits.

Shares of cryptocurrency firms such as Coinbase Global, Riot Platforms and Marathon Digital rose, as bitcoin crossed $40,000 for the first time this year.

— Additional reporting: Reuters

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times