Shares rise but bleak investor morale keeps European sentiment in check

Markets subdued as ECB rate hikes loom

European shares rose on Monday as the oil and gas sector marked its best session in two months, while bleak euro-zone investor morale kept sentiment in check ahead of the European Central Bank’s plan to start hiking interest rates this month.

Dublin

The Dublin market closed slightly higher on Monday, echoing the wider European markets to end the session up 0.34 per cent to 6340.20.

Shares in Ryanair dipped just under 1 per cent to close at €11.40, while hotel group Dalata lost 2 per cent to close at €3.425.

Bank shares were mixed, with Bank of Ireland gaining 2.77 per cent over the day, while AIB was 1.3 per cent lower and Permanent TSB was flat.

Food group Kerry was up 2.53 per cent to €97.32, while Glanbia shed 3 per cent to €10.12.

London

Britain’s top share index climbed on Monday as stable crude prices boosted oil stocks, while investors were waiting for the earnings season to pick up pace to assess the hit to profits from surging prices and higher interest rates.

The blue-chip FTSE 100 closed 0.9 per cent up and the domestically-focused FTSE 250 index ended 0.2 per cent lower with overall trading volumes lightened by a US holiday.

Both the indexes started the second half of 2022 on a subdued note on Friday after a rough first six months on worries that aggressive rate hikes would trigger a global recession.

Oil majors BP and Shell on Monday gained 4.4 per cent and 3.9 per cent respectively, as crude prices rose on concerns about tight supplies amid lower Opec output, unrest in Libya and sanctions on Russia.

While the global nature of the FTSE 100 has helped it outperform world stocks in 2022, worries about the slowing economy and surging prices have hurt the FTSE 250 index. It is down more than 20 per cent this year compared with a 2.1 per cent drop in the FTSE 100.

Auto Trader Group added 3.2 per cent after Peel Hunt upgraded the UK-based online car marketplace’s stock to “buy” from “add” on stable vehicle demand.

Grafton Group slid 7.7 per cent after the building materials supplier said Gavin Slark would step down as chief executive officer after 11 years in the role.

Pets at Home Group slid 8.3 per cent after Royal Bank of Canada downgraded the pet care retailer’s stock to “underperform”.

Europe

The continent-wide Stoxx 600 index was up 0.5 per cent after falling last week on worries about a potential global economic slowdown. Volumes were subdued due to a US market holiday.

London-listed oil giants BP and Shell, and France’s TotalEnergies, jumped between 4.6 per cent and 4.4 per cent. They were the biggest boost to the Stoxx 600 as supply concerns driven by lower Opec output, unrest in Libya and sanctions on Russia lifted crude prices.

The energy sector rallied 4.0 per cent. Healthcare and miners were among the other top sectoral performers.

Limiting gains were declines in real estate, auto and tech stocks, with the latter two weighing on the German Dax, which closed down 0.3 per cent.

A Sentix survey on Monday showed investor morale in the euro zone fell this month to its lowest level since May 2020, pointing to an “inevitable” recession in the 19-country currency bloc.

Producer prices for the region, meanwhile, rose less than expected, data showed. This comes after consumer prices hit a record high, cementing the case for an interest rate hike by the ECB.

Investors will now be watching for minutes of the ECB’s previous rate meeting on Thursday.

Aggressive central bank moves to curtail inflation have left investors worried about the likely hit to economic growth, with the Stoxx 600 down 16 per cent so far this year.

In companies news, German utility Uniper plunged 27.6 per cent with a trader pointing to nationalisation risks amid discussions about its bailout plan.

AMS Osram dropped 7.9 per cent after JP Morgan downgraded the Austrian sensor maker’s stock to “neutral” from “overweight”, citing concerns over high debt levels and end-market exposure.

New York

The New York Stock Exchange was closed due to the Independence Day holiday. – Additional reporting: Reuters

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist