Energy stocks fall as crude price tumbles

Weak US economic data takes toll on bank shares ahead of Fed interest hike

Traders work on the floor of the NYSE. Photograph: Michael Nagle/Bloomberg

Traders work on the floor of the NYSE. Photograph: Michael Nagle/Bloomberg

 

European shares pulled back on Wednesday, as energy stocks fell on tumbling crude prices and banks were hit after weak US data raised questions over future rate hikes in the world’s biggest economy.

DUBLIN

The Iseq index nudged up 0.3 per cent. Paper and packaging group Smurfit Kappa rose 1.6 per cent to €26.84, while Paddy Power Betfair advanced 1 per cent to €98.70 and hotels group Dalata closed up 1.6 per cent at €5.11.

The real estate investment trust stocks were also among the main movers. Hibernia Reit was up 3.8 per cent at €1.42, while Irish Residential Properties moved ahead by 3.4 per cent also to €1.42. Green Reit rose 1.8 per cent to €1.46.

Cement-maker CRH closed relatively flat at €32.28, while Ryanair finished the session up 0.6 per cent at €18.35.

Davy Research published a note on the airline sector highlighting better pricing trends going into the summer and reiterating its “outperform” rating on the stock, while Ryanair also said it was considering ordering bigger versions of Boeing’s 737 to boost capacity on its longest routes.

LONDON

Britain’s top share index ended lower on Wednesday, paring earlier gains as a late drop in crude prices hit oil stocks, more than offsetting gains for housebuilders. The blue chip FTSE 100 index fell 0.35 per cent.

Housebuilders had suffered a selloff in the immediate aftermath of the UK’s hung parliament general election result, but a trading update from Bellway eased investors’ concerns as the firm said demand had not slowed in the run-up to the election.

Bellway’s shares rose 5.9 per cent to a record high, while peers Barratt Developments, Persimmon and Taylor Wimpey were among the top FTSE gainers, up between 1.3 per cent to 3.2 per cent. But a fall in crude oil prices weighed on energy stocks, which took most points off the FTSE. Shares in BP and Royal Dutch Shell fell 1.8 and 1.3 per cent respectively.

Miners were also lower, with Anglo American and Glencore both down more than 2.5 per cent.

Budget airline easyJet rose 1.5 per cent after Davy upgraded the stock to “neutral” from “underperform”, citing its higher operating leverage in the current environment.

EUROPE

The Stoxx 600 index fell 0.3 per cent with the banks, whose lending business gets a boost in margins when rates rise, taking off most points from the pan-European index with a fall of 1.3 per cent.

Shares had earlier been supported by data showing that euro zone industrial output grew in April, and that employment rose in the first quarter of the year to reach a record high.

Among outstanding movers, the Swedish measurement technology firm Hexagon rose 10.8 per cent to a new record high after a Wall Street Journal report that it was in talks about a potential sale to undisclosed buyers. Hexagon said the market would be immediately informed should evaluations lead to concrete results.

French energy company EDF rose 3.3 per cent after appointing a new manager to run its British unit handling the construction of two nuclear reactors at Hinkley Point C.

NEW YORK

Wall Street was slightly lower in early trading on Wednesday as a drop in oil prices weighed on energy stocks, while weak economic data took a toll on bank shares ahead of a widely expected interest rate hike by the Federal Reserve.

Oil prices fell to their lowest in more than five weeks after data showed a surprise buildup in US gasoline inventories and a report from the International Energy Agency (IEA) projected an increase in non-OPEC production.

The S&P 500 energy sector sank 2.4 per cent, led by declines in Exxon and Chevron. Financials fell 1.3 per cent after weaker-than-expected retail sales and consumer prices data raised questions about the Fed’s ability to further tighten monetary policy.

(Additional reporting: Reuters)