European shares up on energy boost, but inflation caps gains

European shares rose on Thursday with a boost from oil stocks, but lagged other major markets as euro zone inflation reached a record high in July and European Central Bank officials hinted at another large rate hike next month. The continent-wide Stoxx 600 ended 0.4 per cent higher, lifted by a 1.7 per cent gain for energy stocks after crude futures rose more than $1.

“Oil and gas stocks have enjoyed a welcome boost today, following a period of weakness in crude prices,” said Joshua Mahony, senior market analyst at online trading platform IG. Consumer prices in the euro zone rose 0.1 per cent month-on-month in July for a 8.9 per cent year-on-year increase, the highest since the euro was created in 1999, the EU’s statistics office confirmed. Of the total, 4.02 percentage points came from more expensive energy, the costs of which surged because of Russia’s invasion of Ukraine.

DUBLIN

Glanbia continued its upward momentum — rising 1.2 per cent to €12.63 — after reporting positive half-year results on Wednesday in an otherwise quiet day’s trading. The food group said that despite price increases its sales had remained robust. Insulation maker Kingspan saw shares fall 3.4 per cent amid further worries about US inflation, where the company has significant operations. Federal Reserve officials at their July meeting indicated they likely would not consider pulling back on interest rate hikes until inflation came down substantially. Ryanair rose 1.5 per cent to €12.79 despite the increase in oil prices. The budget airline is to add more than 500 flights to its London Stansted schedule to keep pace with demand during the October half-term holiday. Elsewhere. AIB fell marginally while Bank of Ireland traded flat.

EUROPE

ECB board member Isabel Schnabel said the euro region’s inflation outlook had failed to improve since the rate hike in July and suggested another big rate increase next month. Money markets are now fully pricing in a half percentage point ECB move in September and a 35 per cent chance of a bigger 75-basis point move. Meanwhile, Norway’s central bank raised interest rates by 50 basis points and said more hikes were in the pipeline. Among stocks, Rockwool tumbled 8.3 per cent after the Danish stone-wool manufacturer cut its 2022 margin guidance on soaring energy prices. Adyen dropped 3.7 per cent after the Dutch payment processor missed core earnings expectations for the first half of 2022. Siegfried jumped 15.7 per cent after the Swiss pharmaceutical company beat first-half expectations and raised its 2022 outlook.

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LONDON

UK’s main equity indexes were subdued on Thursday, with midcap stocks holding near one-week lows hit in the previous session on fears that aggressive steps by the Bank of England to tame decades-high inflation will result in a sharp economic downturn. The FTSE 100 slipped 0.2 per cent, tracking a cautious mood in global markets after the US Federal Reserve’s minutes a day earlier also showed policymakers committed to raising rates as high as needed to bring inflation under control.

A handful of shares trading ex-dividend also weighed on the blue-chip index, with miner Anglo American, lender HSBC and insurer Legal & General falling between 3.7 per cent and 4.3 per cent. The domestically focused mid-cap index was flat. Among other stocks, AO World jumped 12.1 per cent after the online electricals retailer reported full underlying earnings that topped analysts’ estimates. Made.com fell 10 per cent after the online furniture retailer said it was considering equity capital raise.

NEW YORK

Wall Street’s main indexes fell on Thursday after latest data suggested labour market conditions remain tight, while investors assessed minutes from the Federal Reserve’s July meeting that indicated a less aggressive monetary policy tightening path. Eight of the 11 major S&P 500 sectors declined in early trading, with consumer discretionary and communication services stocks leading losses.

The tech-heavy Nasdaq has bounced nearly 22 per cent from its mid-June lows, while the benchmark S&P 500 has risen 17 per cent, supported by upbeat results from corporate America. However, retail earnings have been mixed so far, with encouraging reports from Walmart and Home Depot earlier this week, while Target’s profit slump dragged the retail sector down 1.2 per cent on Wednesday. Kohl’s Corp slid 4 per cent after the retailer cut its full-year sales and profit forecasts. Verizon Communications declined 2.5 per cent after MoffettNathanson downgraded the telecom operator’s shares. ― Additional reporting: Reuters