European shares bounce back on upbeat earnings and deals

Inflation worries no longer centre stage

European stocks rebounded on Thursday from a slump the previous day as investors took comfort from strong corporate earnings and merger talks in the chip sector, which served to take the focus off inflation worries.

The pan-European Stoxx 600 index rose 1.3 per cent after suffering a 1.5 per cent loss in the previous session.


The Iseq overall index managed to rise 1.6 per cent to 8,011.51, with Cairn Homes advancing 1.6 per cent to €1.04, and Flutter Entertainment gaining 3.5 per cent to €146.25.

Ryanair lost 0.5 per cent to €16.05, as rival Easyjet warned about a lack of near-term visibility amid delays in announcements on travel rules affecting its ability to offer financial forecasts.


Kingspan jumped 2.4 per cent to €75.82, as UK home improvement retailer Kingfisher highlighted an ongoing DIY boom as it raised its profit outlook.


Gains in industrial stocks helped London’s Ftse 100 bounce back on Thursday from its worst daily performance in a week, while shares of Trainline slumped to the bottom of the mid-cap index as the UK reorganised its railway system.

The blue-chip index rose 1 per cent, with Experian jumping 4.7 per cent to the top of the index, a day after its upbeat quarterly revenue forecast.

Banks and healthcare stocks, including HSBC, Prudential, AstraZeneca and Smith & Nephew, were also among the biggest boosts on the index.

Globally, stock markets saw a tentative rebound, and bitcoin bounced more than 12 per cent after one of its spectacular smashes, though talk of the US Federal Reserve potentially looking to scale back stimulus kept bond markets under pressure.

“While the markets don’t want central banks to start raising interest rates too soon, they’re also clearly worried about rising prices running away and creating a situation where policymakers have no choice but to act,” said Russ Mould, investment director at AJ Bell.

“The Covid-19 situation is very different in emerging markets and this could be a threat to the commodity-focused firms on the Ftse, given a lot of demand comes from developing countries.”


Oslo-listed chipmaker Nordic Semiconductor jumped 9.8 per cent to the top of Stoxx 600 after an Italian daily reported that Franco-Italian rival STMicroelectronics is mulling an offer to buy the company.

But, Nordic Semiconductor’s chief financial officer said the firm had “no knowledge” of any takeover interest from STMicroelectronics.

A rally in economy-linked cyclical sectors on the back of reopening optimism and solid earnings drove the European shares to record highs earlier this month, but inflation worries and a rise in market volatility put the index on course for weekly losses.

In earnings, French conglomerate Bouygues edged up 0.3 per cent after it raised the full-year guidance for its telecoms division and reported a smaller-than-expected first-quarter core loss.

Deutsche Telekom added 2.5 per cent on raising its medium-term core profit outlook.


Wall Street’s main indexes were in rebound mode in mid-afternoon trading, after a three-day slide, helped by gains in technology stocks, as the smallest weekly jobless claims since the start of a pandemic-driven recession lifted the mood.

Wall Street’s main indexes fell for the third consecutive session on Wednesday after minutes from Fed’s meeting last month indicated many policymakers thought it would be appropriate to discuss easing crisis-era support in upcoming meetings if the strong economic momentum is sustained.

However, many analysts viewed the statement as old news as economic data since then has showed an unexpected slowdown in the labour market, fanning inflation worries.

Ralph Lauren dropped after it forecast full-year sales below analysts’ estimates. Kohl’s slumped after warning of a hit to its full-year profit margin from higher labour and shipping costs as well as selling fewer products at full price.

Cisco Systems cautioned that supply chain issues would linger through the end of 2021 and forecast its current-quarter profit below estimates. The company's shares, however, reversed premarket gains to rise.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times