European shares enjoy timid rebound

Investors remain wary as trade tensions stalk markets

European shares climbed on Wednesday but the modest rebound failed to erase the previous session's losses as investors' fears about an ongoing trade dispute between the United States and China lingered. The pan-European Stoxx 600 edged up 0.3 per cent, while Germany's trade-sensitive DAX managed only a 0.1 per cent gain. The growing Sino-US trade conflict has already hit markets and with both protagonists showing no signs of willingness to back down, many analysts fear the worst is yet to come for markets.


The Iseq index rose 0.5 per cent to 7,100 roughly tracking trends elsewhere. AIB gave up some of Tuesday's gains, falling 0.6 per cent to €4.92. In contrast Bank of Ireland was up 3 per cent to €7 following an upgrade from UBS. Iseq heavyweight CRH, which is likely to affected by escalating trade tensions internationally, traded largely flat on the day at €31.52. Providence was down a further 1.5 per cent in tandem with other oil-related stocks as markets awaited Opec's latest pronouncement on Friday. Smurfit Kappa keeps on climbing after seeing off US rival International Paper's takeover bid. The paper and packaging group rose 1.6 per cent to €35.


Britain's top share index rose on Wednesday amid a broad-based rebound in Europe as immediate worries over the impact of a trade spat between the United States and China eased, but housebuilder Berkeley slumped after a profit warning. The FTSE 100 climbed 0.3 per cent following three straight sessions of losses, while the domestically focused FTSE 250 gained 0.4 per cent. The FTSE opened 1 per cent higher, but gains in sterling put pressure on it later in the day. The pound jumped after prime minister Theresa May won a crucial Brexit vote in parliament. Multinational consumer stocks led the rebound on the FTSE, having suffered the worst falls in the previous session. Cigarette makers British American Tobacco and Imperial Brands got a boost from broker Liberum, which recommended investors buy them in spite of increased regulatory risks. Oil majors BP and Royal Dutch Shell were the biggest drags, down 1.1 and 0.9 per cent respectively, as oil markets stayed tense ahead of Friday's Opec meeting.


Niggling trade worries were evident in a fourth straight day of losses for the auto sector, down 0.6 per cent, and further falls in Airbus shares which have been sensitive to the China-US tariff tit-for-tat. Banking stocks supported the market, with Spain's Banco Santander and Italy's Unicredit rising 1.4 per cent and 2.8 per cent respectively after the Franco-German agreement to further the integration of the euro zone. Italian bank Banco BPM sold non-performing loans (NPLs) at a higher than expected price, also boosting sentiment around the banking sector particularly in the context of political uncertainty in Italy. Italy's bank stocks index jumped 2.2 per cent in its best day since June 11th.


Healthcare stocks were the biggest boost to the index. Roche was the main driver, rising 2.6 per cent after a report said the Swiss pharma firm could soon announce an acquisition of US cancer drugmaker Tesaro. French advertising company JCDecaux jumped 7.6 per cent after submitting a non-binding offer for Australia's APN Outdoor Group.


A jump in technology and media stocks lifted the S&P 500 on Wednesday and pushed the Nasdaq to a record high, but the Dow remained under pressure from an escalation in the US-China trade spat that has slammed global markets. Twenty-First Century Fox gained 7.1 per cent after Walt Disney sweetened its offer for some of the company's assets to $71.3 billion, looking to topple Comcast's bid. The S&P 500 media index rose 1.1 per cent with all its 14 members in positive territory. Viacom gained 2.4 per cent, while DISH Network and Discovery were up about a percent. – Additional repoting by Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times