Business

European shares pare losses as geopolitical jitters ease

Continent-wide Stoxx 600 closes 0.1 per cent lower

All three US indexes have endured weekly losses amid diminishing hopes that the Federal Reserve will cut interest rates anytime soon. Photograph: Getty Images

Eoin Burke-Kennedy
Fri Apr 19 2024 - 18:25

European stocks closed lower on Friday, but off their over one-month intraday low, as anxiety around escalating Middle East tensions seemed to ease, while French cosmetic giant L’Oreal logged its best day since early January after robust results.

The continentwide Stoxx 600 closed 0.1 per cent lower, but notching its biggest weekly decline of 1.2 per cent since mid-January owing to renewed focus on geopolitical tensions that steered investors away from risky assets and a rout in technology stocks.

Explosions echoed over an Iranian city in what sources described as an Israeli attack, but Tehran downplayed the incident and indicated it had no plans for retaliation — a response that appeared gauged towards averting region-wide war.

“The Israeli retaliation was less severe than had been feared and so far it appears that Iran has taken the more limited response as a signal that the rhetoric needs to be dialled down and both sides step back,” said Stuart Cole, chief economist at Equiti Capital.

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Dublin

AIB was down 0.3 per cent while rival Bank of Ireland was up 0.3 per cent in a mixed day for financials. PTSB traded flat after the lender confirmed it had reached agreement with Mandate and the Financial Services Union to give staff a 4.7 per cent pay increase for 2024. It is understood that no deal has yet been struck with Unite, which represents some employees at the majority State-owned lender.

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Home builder Cairn dropped 2 per cent to close the session at €1.97 as the Central Statistics Office this week suggested house price inflation accelerated to over 6 per cent in February. Elsewhere Iseq heavyweight Ryanair traded down 0.6 per cent at €20.43 amid the ongoing turmoil in the Middle East which has created volatility in oil markets.

Europe

As for big earnings, L’Oreal jumped 5 per cent after beating expectations with a strong rise in first-quarter sales. Schneider Electric dropped 3.2 per cent as the French company is in talks to US engineering software producer Bentley Systems over a potential “strategic transaction”. Royal Unibrew jumped 18.1 per cent after the Danish brewer posted first-quarter results above expectations and raised its full-year outlook.

Warehouses De Pauw climbed 3.1 per cent after first-quarter results showed signs of stabilisation in its rental portfolio.

With markets gearing up for the full volley of corporate reports in the weeks to follow, first-quarter earnings are expected to have decreased 12.1 per cent year-on-year, LSEG data showed on Tuesday.

Among others, Volvo shed 4.1 per cent after its second biggest shareholder Geely Holding sold part of its stake in the Swedish truck maker.

London

UK’s FTSE 100 rose on Friday after dovish comments from Bank of England deputy governor Dave Ramsden on inflation boosted bets on monetary policy easing by the UK central bank in 2024, while Middle East tensions continued to sour sentiment.

Both of Britain’s main equity gauges remained in the red for most of the session, but the benchmark FTSE 100 rebounded 0.2 per cent in the last hour of trading. The midcap FTSE 250 FTMC was down 0.3 per cent.

British paper and packaging group Mondi was the top gainer on FTSE 100, surging 9.3 per cent, as it denied making an offer to buy DS Smith after its UK peer agreed to a £5.8 billion deal with International Paper.

Shares of DS Smith dropped 10.3 per cent to the bottom of the benchmark index.

New York

The Nasdaq and the S&P 500 dipped on Friday, with Netflix among the biggest drags on a dour quarterly forecast, while all three indexes stared at weekly losses amid diminishing hopes that the Federal Reserve would cut interest rates anytime soon.

Netflix slumped 8.3 per cent after the video streaming pioneer unexpectedly said it would no longer provide subscriber counts, while its second-quarter revenue forecast fell short of Wall Street expectations.

Equities were rattled this week as investors readjusted their expectations over how much the Fed would cut rates this year, with both the S&P 500 and the blue-chip Dow poised for a third weekly decline, while the Nasdaq was set for its fourth consecutive weekly loss, if current trend holds.

Cushioning the blue-chip Dow, American Express added 4.6 per cent after the credit card lender’s first-quarter profit surpassed Wall Street estimates.

Chip-related stocks bore the brunt of the sell-off, with AI giant Nvidia down 3.1 per cent, while the Philadelphia Semiconductor Index lost 2 per cent, on track for its worst weekly performance so far this year. — Additional reporting Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

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