Record Ryanair profits push European shares higher

Rally in global equity markets driven by flurry of merger and acquisition activity

The Irish market reacted very well to Ryanair’s results

The Irish market reacted very well to Ryanair’s results


Global equity markets rose yesterday as investors sought better returns in stocks, while uncertainty over the Federal Reserve’s stimulus programme caused gold to pause from its longest losing streak in four years.

Despite major US and European stock indices being up double digits – the US benchmark S&P 500 index is almost 17 per cent higher so far this year – investors still see better returns ahead in equities than elsewhere.

In Europe, the FTSE, Iseq and Stoxx were lifted by a surge in Ryanair after it reported better-than-expected earnings.

Yesterday was a good day for the Irish market, with the Iseq outperforming its European peers to finish up 1.5 per cent at 4,063.

That was due to Ryanair results according to one stockbroker, who said the stock reacted “very well” to the budget airline’s numbers.

“Normally they are very conservative in their guidance so people were expecting a lower guidance. That was the key surprise and it fed into the wider market given Ryanair’s weighting in the Iseq.”

Ryanair jumped the most in more than 18 months after reporting a 13 per cent rise in full-year profit. Following a strong share price rally, the stock ended the day up 6.8 per cent at €6.76, the highest price since the airline’s initial public offering in May 1997.

Rival Aer Lingus also performed well, climbing 5.2 per cent to finish the day at €1.59, as the pensions issue comes closer to a head.

Drugmaker Elan ended the day up nearly 2 per cent on the back of a rumour by US station CNBC that Royalty Pharma was to raise its bid. After markets closed, Royalty Pharma raised its offer to buy Elan to $12.50 per share. “Elan should thus have a good day tomorrow,” one analyst said.

Britain’s benchmark equity index rose yesterday to its best closing level since late 2000, helped by rising bank stocks. Analysts said there was little holding it back from its all-time highs.

Royal Bank of Scotland rose 4.5 per cent as Numis Securities advised buying the shares. RBS’s rise enabled the UK banking sector to advance 0.9 per cent, which gave one of the biggest lifts to the FTSE 100.

EasyJet jumped 4 per cent after Ryanair posted a 13 per cent increase in full-year profit after tax.

Shares in rail and bus operator FirstGroup dived by more than 30 per cent after it announced plans to raise £615 million from shareholders in a rights issue and said it would axe its dividend for the next year.

The FTSE 100 closed up 32.6 points at 6755.6, a 0.5 per cent gain and its highest finish since September 2000 when the dotcom boom was in full swing.

European stocks advanced, extending the Stoxx Europe 600 Index’s highest level since June 2008, as the region’s carmakers rallied.

Peugeot and Volkswagen both gained more than 3 per cent as Morgan Stanley raised its recommendation on European automobile companies. Peugeot, Europe’s second-largest automobile producer by volume, jumped 5.9 per cent to €7.56. Volkswagen added 3.2 per cent to €173.85, while Bayerische Motoren Werke , the world’s biggest luxury-car maker, advanced 2.9 per cent to €74.02.

Lufthansa rose 3.6 per cent to €16.07 as Ryanair reported a profit increase.

US stocks rose in early trading as acquisition activity gave support, but investors were hesitant to rush into the market with indexes hovering around record levels.

Deals, including Yahoo’s $1.1 billion bid for Tumblr, indicate that companies continue to search for growth through acquisitions, a bullish sign for stocks. Yahoo was up 1.2 per cent at $26.83.

Additional reporting: Bloomberg, Reuters