Markets

Draghi remarks take shine off gains for European shares

Trade tensions linger in mixed picture for markets

Bank of Ireland finished down 4.3 per cent at €5.45 as sentiment turned negative against banking stocks.

Thu Jan 24 2019 - 19:05

European shares finished higher but lost some of their earlier gains, after a bounce in tech stocks was offset by a late slide among banks following downbeat comments from European Central Bank president Mario Draghi.

Investors also reacted negatively after US commerce secretary Wilbur Ross said the US and China were "miles and miles" from resolving their trade issues, although he did add that there was a fair chance the two countries would strike a deal.

Dublin

The Iseq closed down 0.9 per cent, dragged down by Ryanair, which resumed its recent choppy form by falling 3.3 per cent to €10.62. Building materials group CRH, the largest stock on the index, fared better, but only managed to close up about 0.1 per cent at €24.90.

Bank of Ireland finished down 4.3 per cent at €5.45 as sentiment turned negative against banking stocks. Food group Kerry and insulation maker Kingspan were both about 1.4 per cent lower at €90.55 and €37.80 respectively.

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Among smaller stocks, recruitment company CPL Resources added 7.7 per cent to €6.40 after it published an upbeat outlook statement, citing favourable market conditions.

London

The FTSE 100 ended lower for the third consecutive session as weak sector earnings hurt Vodafone and Rentokil and equities were hit by Ross's comments. The index of blue-chip stocks was down 0.4 per cent.

Vodafone fell 3.5 per cent after its South African unit reported a slowdown in service revenue growth. Pest control company Rentokil was also among big fallers, sliding 3.3 per cent after results at US peer Rollins missed Wall Street expectations.

Consumer goods maker Reckitt Benckiser fell 3.3 per cent after analysts at Jefferies downgraded the stock.

British Airways owner IAG jumped to session highs shortly after it ruled out a bid for Norwegian Air and said it would sell its remaining stake in the budget airline. IAG closed up 0.3 per cent on the day.

Earnings also impacted mid-cap shares. Frankie & Benny's owner Restaurant Group was the top faller, down 4 per cent after predicting lower full-year like-for-like sales.

Europe

The euro zone Stoxx index ended up 0.5 per cent, having risen as much as 0.8 per cent earlier in the day. Germany’s Dax was up 0.5 per cent, France’s Cac 40 was up 0.65 per cent and Italy’s FTSE MIB climbed 0.9 per cent.

But stocks were driven off earlier highs after Mr Draghi acknowledged that economic growth in the euro zone was likely to be weaker than previously expected due to the fallout from factors ranging from China’s slowdown to Brexit.

The euro zone’s banking index fell 0.5 per cent, having risen more than 1 per cent before Mr Draghi’s remarks.

Tech stocks continued to be strong, ending up more than 2 per cent. Shares in STMicro, which hit a two-year low earlier this month, rose 10 per cent after the chipmaker gave an upbeat forecast for the second half of the year, easing market fears about a downturn in the semiconductor industry.

Norwegian Air Shuttle fell more than 20 per cent after IAG said it did not intend to make an offer for the company and that it would be selling its 3.93 per cent shareholding.

US

A rally in shares of chipmakers and airlines lifted the Nasdaq in the first half of the session, while the Dow Jones industrials and the S&P 500 wavered due to concerns about trade and the longest ever US government shutdown.

American Airlines, Southwest Airlines and JetBlue Airways gained 5 per cent each after reporting quarterly profits that beat analysts' expectations.

Southwest and JetBlue however said the partial US government shutdown, now in its 34th day, was disruptive.

Intel climbed 3.6 per cent and Starbucks slipped 1.8 per cent. Both companies are scheduled to report results after the closing bell.

– Additional reporting: Reuters

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