Bull market for European stocks, as 2017 Iseq trading opens

Investors welcome rise in US manufactoring and German inflation figures

Wall Street was higher in early afternoon trading on Tuesday as a post-election rally extended into the new year.   Photographer: Ramin Talaie/Bloomberg News

Wall Street was higher in early afternoon trading on Tuesday as a post-election rally extended into the new year. Photographer: Ramin Talaie/Bloomberg News

 

European stocks entered a bull market, the FTSE 100 in London hit a new record and Ireland’s Iseq index briefly hit levels not seen in almost a year in the first day of trading in 2017, as data bolstered optimism about the world’s largest economies.

The pan-European Stoxx 600 index rose 0.7 per cent to 365.71 points, bringing its advance from its February 2016 low to more than 20 per cent, which meets the definition of a bull market.

There was plenty for investors to cheer, with figures published on Tuesday showing that US manufacturing rose at the fastest pace in two years, the rate of German inflation doubled last month and Chinese manufacturing closed the year on a relatively robust note.

Crude oil soared 2.5 per cent to breach $55 a barrel, its best level since July 2015. The dollar rose to its highest level in more than 14 months against the euro, to $1.0342.

DUBLIN

The Iseq rose as much as 1.1 per cent during the session to a level not seen since mid-January last year, though it pared its gains by the end of trading to close up just 0.1 per cent at 6,525.07 points.

Financials jumped in line with banking stocks globally, as concerns of a tighter regulatory environment were pushed back. Global banking regulators postponed the approval of long-awaited rules designed to avert a repeat of the financial crisis after failing to agree on the minimum amount of capital banks must hold.

Bank of Ireland rose 6.8 per cent to 25 cent, while Permanent TSB gained 2 per cent to €2.82.

Elsewhere, Tullow Oil jumped 5.9 per cent to €3.85 on the back or rising oil prices, while oil explorer Providence Resources surged 8.8 per cent to 19 cent.

Smurfit Kappa advanced by 1.9 per cent to €22.20, with analysts at Cantor Fitzgerald in Dublin highlighting the attractions of the paper packaging group’s stock to clients in a note.

LONDON

The FTSE 100 closed at a record high on Tuesday as the year-end market rally continued into the first day of trading in 2017 in London.

The benchmark index ended the session up 0.5 per cent at 7,177.89 points.

Banking stocks were among the top performers, with Barclays soaring 3.8 per cent, while Lloyds Banking Group added 3.4 per cent, RBS gained 2.9 per cent and HSBC rose 1.4 per cent.

InterContinental Hotels reached an all-time high of £38.01 during the session after analysts in Barclays upgraded their rating on the stock to “overweight”, the equivalent of a “buy” recommendation.

EUROPE

Strength in financials and commodity-related stocks continued to underpin European equity markets. Europe’s basic resources sector and oil & gas were up 1.3 per cent and 0.9 per cent respectively.

Financials, again, were stand-out winners, with the STOXX Europe 600 Banks index finishing 2.8 per cent higher after hitting a one-year high.

Italian banks were once again among top risers, with newly merged Banco BPM gaining 7.2 per cent on its second day of trading, building on a strong rise in the previous session.

Among other sharp movers, Euronext surged nearly 7 per cent after London Stock Exchange agreed to sell its French clearing business to Euronext for €510 million in its bid to win regulatory approval for a merger with Deutsche Boerse.

NEW YORK

Wall Street was higher in early afternoon trading on Tuesday as a post-election rally extended into the new year.

The Dow Jones Industrial Average came within a hair’s breadth of the milestone in December as investors bet that US President-elect Donald Trump would introduce market-friendly policies such as tax cuts and simpler regulation.

By early afternoon, the Dow was up 0.4 per cent at 19,837, while the Nasdaq and the S&P were 0.6 per cent higher.

Financials advamced after Barclays raised price targets on several Wall Street banks including Bank of America, Wells Fargo and JP Morgan.

Marathon Petroleum rose 6.9 per cent to after the company said it would explore a spinoff of its retail business, caving to pressure from activist investor Elliott Management.

(Additional reporting: Bloomberg, Reuters.)