European shares gain but worries over political instability loom

In Dublin, real estate investment trusts continue to see buying activity

Traders work on the floor of the  NYSE, May 31st, 2017. Photograph: Reuters/Brendan McDermid

Traders work on the floor of the NYSE, May 31st, 2017. Photograph: Reuters/Brendan McDermid

 

European shares posted their fourth straight month of gains yesterday though fresh political worries and the lack of new catalysts, following a surprisingly strong earnings season, spurred investors to lock in profits.

The pan-European Stoxx 600 index ended the day little changed and up 0.9 per cent in May, the slimmest rise since the streak of monthly gains began in February.

Robust corporate profits, relatively cheap valuations and diminishing political risks have lured investors back into regional stocks, but jitters relating to early autumn elections in Italy and the looming election in Britain has soured sentiment.

DUBLIN The Iseq index finished down 0.7 per cent, as some stocks weakened toward the end of the session. Ryanair slipped 2.3 per cent to €18

at the close, having traded strongly for most of the day. The airline added 3.8 per cent to its share price on Tuesday as it reported a record annual profit.

There were high levels of trading in Bank of Ireland all about the 24 cent level, which was where the stock closed.

The real estate investment trusts continued to see some buying activity, with Hibernia Reit adding 2.2 per cent to €1.39. Green Reit closed up 0.9 per cent at €1.44, while Irish Residential Properties Reit nudged down 0.8 per cent to €1.31.

Building materials group CRH, the biggest stock on the Dublin market, closed down 0.9 per cent at €32.06, while food group Aryzta fell 3.2 per cent to €27.36. There was a heavy volume of trading in the Swiss-Irish company on its Zurich listing as amid some end-of-month rebalancing by index-tracking funds.

LONDON

The FTSE 100 ended its strongest month of the year on a quiet note yesterday as a choppy day for sterling gave investors little reason to chase the rally.

The UK blue-chip index hit a record high earlier in the session but lost those gains to finish the day slightly lower. Those moves closely tracked sterling which was knocked around by various polls that pointed to a range of possible election outcomes, including a hung parliament.

Commodity-related stocks, usually also beneficiaries from a weak pound, suffered as a supply glut and selling by Chinese speculators spurred the sharpest rout in iron prices this year. Bellwethers Glencore, Rio Tinto and BHP Billiton fell more than 2 per cent.

Online food delivery service Just Eat rose 3 per cent to a record high as broker Peel Hunt started coverage on the stock with a “buy” rating. Just Eat shares are now up more than 150 per cent since their listing.

EUROPE In Germany, the Dax edged up 0.1 per cent, while in France, the Cac 40 closed down 0.4 per cent. Italian stocks fell, dragged lower primarily by banks. Among Italian lenders, Carige fell 6.5 per cent as a row over the company’s management fuelled worries that its recapitalisation plans could be delayed.

Deutsche Bank shares ended the day down more than 3.4 per cent as warnings from US bellwethers JPMorgan and Bank of America on revenue weakness hit European peers.

Ericsson rose 4.5 per cent, after activist investor Cevian Capital bought a stake of more than 5 per cent. Cellnex soared 4 per cent after a Bloomberg report said that American Tower may bid. Cellnex said it has had no contact with the firm.

NEW YORK

The diminished appeal of stocks underpinned safe-haven bids for gold and low-risk US and German government bonds.

The Dow Jones ended down 22.39 points, or 0.11 per cent, at 21,007.08, the S&P 500 finished 1.12 points, or 0.05 per cent, lower at 2,411.79 and the Nasdaq closed down 4.67 points, or 0.08 per cent, at 6,198.52. For May, the Dow gained 0.3 per cent; the S&P 1.2 per cent and the Nasdaq 2.5 per cent.

–(Additional reporting: Reuters)