European shares hit five-week high on rebound optimism

FTSE 100 ends lower as UK prime minister sets out more restrictions

European shares hit a five-week high on Monday as optimism about a stable economic recovery in China and hopes of more US fiscal stimulus helped offset concerns around surging coronavirus cases across the continent.

The pan-European Stoxx 600 marked a third straight day of gains to end 0.7 per cent higher, led by utilities, technology and autos stocks.

The Trump administration on Sunday called on the US Congress to pass a stripped-down coronavirus relief Bill after talks stalled on a more comprehensive stimulus deal.

"Investors have not lost faith that further stimulus measures will follow and that an effective Covid-19 vaccine will soon be placed on the market," said Milan Cutkovic, market analyst at Axi.


But a jump in domestic coronavirus cases has raised the spectre of fresh lockdowns and cast a shadow over a nascent economic rebound.


The Iseq index was up almost 1 per cent on the day, mirroring movements elsewhere. Swiss-Irish food group Aryzta was up nearly 11 per cent at 60 cent amid speculation that it may still be taken over or part of it sold off.

The company's new chairman Urs Jordi said last week that the baked goods specialist had received bid approaches for parts of the company since he was installed three weeks ago.

Ryanair was up 0.4 per cent at €12.56 and has maintained a relatively strong showing despite the uncertain outlook for aviation.

Insulation providers Kingspan was up 2.7 per cent amid more upbeat sentiment for the sector and speculation around further stimulus for the US economy, where it operates.

Building materials group CRH, which also has significant operations in the US, was up marginally at €33.60.

The index's main financial Bank of Ireland was up 1.7 per cent while rival AIB traded broadly flat. Kerry Group, the State's largest food company, was also up 1.3 per cent at €111.80.


London's FTSE 100 fell on Monday in a choppy trading session as a dip in oil prices hit energy stocks and as prime minister Boris Johnson laid out fresh restrictions to contain the growing coronavirus crisis.

After rising 0.3 per cent in morning trading, the blue-chip FTSE 100 ended 0.3 per cent lower, dragged down by oil majors BP and Royal Dutch Shell, with a rise in the pound also pressuring exporters.

The mid-cap FTSE 250, on the other hand, closed 0.5 per cent higher, led by a jump in shares of corporate services firm Sanne Group after RBC upgraded its rating on the stock to "outperform".

All eyes this week will be on a European Union summit for clues on Brexit negotiations. The FTSE banking index dipped 0.4 per cent as Bank of England policymaker Jonathan Haskel said the central bank had an "absolutely open mind" on negative interest rates.

London-listed shares of Carnival fell 4.9 per cent after the cruise line operator cancelled all but the PortMiami and Port Canaveral cruises for rest of the year.


With Italy preparing for nationwide curbs, the European Central Bank's chief economist, Philip Lane, said the euro zone economy was entering a tougher phase.

The Italian bourse ended 0.6 per cent higher, shrugging off a slide in bank stocks as Italian government bond yields fell near record lows on expectations of a new round of stimulus from the European Central Bank.

As the third-quarter corporate earnings season gets under way, analysts expect earnings at Stoxx 600 firms to have declined 38 per cent year-on-year in the quarter following a 50.8 per cent slump in the prior quarter, according to Refinitiv data. The European telecoms index surged to a three-week high, powered by a 6.8 per cent jump for Dutch telecommunications company KPN following a report that Sweden-based private equity firm EQT was considering a takeover.

New York

Wall Street’s main indexes rose for a fourth straight session on Monday, helped by a tech boost and on optimism that Washington would reach a deal over more fiscal support, with investors also gearing up for the third-quarter corporate earnings season.

Apple was a major support for the three main stock indexes with a 3.6 per cent gain ahead of a special event on Tuesday, which most analysts believe will be used to unveil the new iPhone with 5G capabilities.

Amazon. com climbed 3.5 per cent ahead of its annual Prime Day shopping event on October 13th and 14th.

Results from big US banks will be in focus this week, with JPMorgan and Citigroup set to report on Tuesday.

Bank shares gained 0.7 per cent. Overall, analysts expect third-quarter earnings for S&P 500 companies to have fallen 20.7 per cent from a year earlier, smaller than a 30.6 per cent slump in the second quarter.

Twitter gained 5.2 per cent after Deutsche Bank upgraded the social media firm's shares to "buy" on expectations of continued growth in 2021.

– Additional reporting by Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times