European stocks climbed on Monday, with technology firms spearheading gains, as optimism about the euro zone economy likely avoiding a steep recession overshadowed hawkish remarks from European Central Bank (ECB) officials.
The pan-European Stoxx 600 closed up 0.6 per cent. The index had posted its first weekly decline of the year in the previous session on jitters around the earnings season and upcoming interest rate decisions from major central banks, including the European Central Bank.
The technology sector jumped 2.3 per cent, in line with its US counterpart, boosted by shares of semiconductor firms such as ASML Holding and Infineon Technologies.
The benchmark Stoxx 600 index hit a nine-month high last week as a warm winter in Europe and China abandoning its tight Covid-19 rules brightened the outlook for Europe’s economy.
Dublin
AIB fell on Monday while Bank of Ireland rose marginally as the sector internationally gears up for job cuts linked to falling revenues.
In past few months, banks including Credit Suisse, Goldman Sachs and Morgan Stanley have begun cutting jobs. Ryanair rose by 0.4 per cent to €14.99 in what has been a strong few weeks for the airline.
Last week it reported 4.95 million bookings in the space of a week, the most in the airline’s more than 30-year history.
Packaging group Smurfit Kappa rose 1 per cent to €39.44 amid the brightening economic outlook. Elsewhere insulation maker Kingspan rose by 1.8 per cent to €58.16 while home builder Cairn fell by 1.76 per cent to 95 cent.
London
UK’s main stock indexes closed higher on Monday, buoyed by consumer firms and miners, while investors awaited domestic and U.S economic data due this week to gauge the likelihood of a recession.
The blue-chip FTSE 100 closed up 0.3 per cent to 7792.5, after posting its first weekly loss of the year in the previous session on worries about a recession and hawkish comments from central bank policymakers. The index last week came close to its record high of 7,903.5.
Consumer staples firms such as Diageo and Ocado Group rose between 0.3 per cent and 4 per cent, while base metal miners gained 0.6 per cent as copper prices ticked up.
Focus this week will be on GDP and inflation data out of the United States as well as business activity data from the UK.
“These will offer insight into two key and related factors which are grabbing the market’s attention right now,” AJ Bell investment director Russ Mould said.
“First, will the US avoid a deep recession and second, will inflation ease sufficiently to allow the Federal Reserve to ease up on interest rates before it has inflicted too much pain on businesses and consumers?”
Among single stocks, Dignity climbed 8.2 per cent, after the funeral services provider agreed to a sweetened £281 million takeover by a consortium backed by investment firms SPWOne V Ltd, Castelnau Group and Phoenix Asset Management Partners.
Europe
Despite signs of easing inflation in the euro zone, ECB policymakers have remained hawkish, with governing council members Klaas Knot and Peter Kazimir backing the case for two more 50 basis point rate hikes.
Investors will look for more clues on the central bank’s tightening plans when ECB president Christine Lagarde speaks later in the day. With the earnings season under way, investors are waiting to see if the results will continue to support the recent rally in markets.
Fourth-quarter earnings for Stoxx 600 companies are forecast to have grown by 10.7 per cent year-on-year, the slowest in two years, according to Refinitiv data.
The S&P Global Purchasing Managers’ Index (PMI) survey, due on Tuesday, was expected to show an improvement in January euro zone business activity.
Euro zone consumer confidence improved in January from December, data on Monday showed. Limiting gains on Germany’s Dax index, Symrise fell 5.5 per cent after the German flavour and fragrance maker reported a lower-than-expected EBITDA margin for 2022.
Remy Cointreau rose 3.3 per cent after Citigroup upgraded the French spirits maker’s stock to “buy”.
New York
Gains in chipmakers boosted the technology sector, which has been hit by recession concerns amid high interest rates, leading Microsoft, Amazon and Alphabet to lay off thousands of employees.
Investors are anxious to hear from corporate executives about their economic outlook in a week in which Microsoft posts results on Tuesday, Tesla and IBM on Wednesday and Intel on Thursday.
Analysts expect year-over-year fourth-quarter earnings from S&P 500 companies to decline 2.9 per cent, according to IBES Refinitiv data, compared with a 1.6 per cent decline at the beginning of the year.
The Dow Jones Industrial Average rose 0.72 per cent, the S&P 500 gained 0.99 per cent and the Nasdaq Composite added 1.55 per cent, pushing ahead from gains last Friday, its best session since late November. – Additional report by Reuters
