European investors shift focus from politics

Share falls reflect signs of consumer confidence slump in Brexit Britain

Tech heavy Nasdaq  rose. Photograph: Reuters

Tech heavy Nasdaq rose. Photograph: Reuters

 

Deal-making and earnings underpinned European stock markets on Tuesday as the focus shifted back to fundamentals and away from politics, for now.

DUBLIN

Ireland’s benchmark index reversed some of yesterday’s French motivated gains and closed down by 0.48 per cent.

There was profit taking across sectors after Monday’s strong performance with Ryanair and CRH falling by 0.63 and 0.67 per cent respectively.

Permanent TSB, which had been under pressure, traded positive on Monday and held those gains on Tuesday, closing up by 0.78 per cent at €2.469.

One of the more significant gainers was Kingspan which, according to traders, is benefitting on the back of talk of US infrastructure spend. The building materials company closed up 2.53 per cent at €31.455.

Investors in Bank of Ireland are standing by for the bank’s results on Friday. Despite yesterday’s gains, which reflected a pan-European gain for financials, the stock fell by 0.39 per cent to €0.254.

LONDON

Britain’s FTSE 100 index was up 0.15 per cent, with energy and healthcare stocks supporting gains.

The FTSE’s rise on Monday had been modest compared to European benchmarks, with investors flagging obstacles ahead.

Restaurant and pub owner Whitbread, and floor-covering retailer Carpetright, were the top blue-chip and small-cap fallers after their results were hit by slowing sales growth, adding to evidence of deteriorating UK consumer confidence.

Whitbread scored its worst day since the Brexit vote last June, down 7.2 per cent after it indicated tougher times were ahead, saying it expected consumer confidence to dip this year. Its Costa Coffee chain saw like-for-like sales fall, and margins down 0.8 percentage points year on year due to a rise in the minimum wage.

Small-cap Carpetright, Britain’s biggest floor covering retailer, fell 8.1 per cent after the firm said full year profit would be at the lower end of market expectations, also citing tougher trading conditions.

Some of the stocks that rallied most on Monday fell back on Tuesday, with Kingfisher, whose French exposure made it especially sensitive to the post-election rally, down 3.2 per cent on the day.

EUROPE

The pan-European STOXX 600 index ended up 0.2 per cent, after briefly hitting its highest level since August 2015 during the session.

France’s CAC 40, which rallied more than 4 per cent on Monday, was up 0.17 per cent. Earnings were firmly in focus, with shares in AMS surging 19.6 per cent to a record high after the chipmaker reported first quarter revenues above its own forecast and added that it may raise its mid-term revenue growth target.

Well-received earnings also boosted shares in auto stock Volvo, which rose 7.6 per cent after beating first quarter forecasts.

M&A action also fuelled shares, with luxury goods firm Christian Dior rocketing around 11 per cent to touch a fresh all-time high after a buyout deal.

LVMH and billionaire businessman Bernard Arnault announced a deal to simplify their relationship with Christian Dior by buying out its minority shareholders, aimed at boosting LVMH’s earnings. LVMH’s shares hit a record level and traded 3.9 per cent higher, while rival Hermes fell 4.5 per cent.

NEW YORK

The Nasdaq hit 6,000 for the first time on Tuesday and the Dow Jones surged as strong earnings underscored the health of corporate America. The tech-heavy Nasdaq rose, powered by gains in index heavyweights Apple and Microsoft.

Investors are keeping a close watch on the latest earnings season, hoping that companies will justify their lofty valuations, spurred in part by President Donald Trump’s pro-growth promises.

Better-than-expected profits at McDonald’s and Caterpillar helped the Dow outperform other major Wall Street indexes. Gains on the S&P were broad-based. Ten of its 11 major sectors were higher.

Biogen’s shares jumped after the biotech company reported better-than-expected quarterly profit and revenue on Tuesday.

-(Additional reporting: Reuters)