European shares hit four-year peak on trade hopes

In Dublin, AIB bucks upward momentum across financials on foot of planned job losses

 

European shares hit four-year highs on Tuesday, edging closer to record levels, driven by a rally in energy and commodity-linked stocks as US-China trade-related optimism boosted risk appetite.

China is pushing US president Donald Trump to remove more tariffs as part of a “phase one” trade deal, which may be signed this month – a first step to ending a 16-month long trade war.

Mining companies rose 1.7 per cent, extending gains for a third session, while rising oil prices bolstered a rally in energy stocks. Banks continued their wining streak, ending higher for a fourth day in five.

“Hopefully we’ll get a deal [next week] and get some line of sight into talks beyond the phase one deal, what it means for the December tariffs. There is [a] little bit of scope for output momentum continuing over that period,” said David Page, senior economist at AXA Investment Managers. “European stocks have been caught very much in that big spat, so I think there is lot of positivity in the

markets.”

DUBLIN*

AIB bucked the upward trend across European financials, falling nearly 2 per cent to close at just under €3. This followed news that the lender planned to shed more than 300 jobs this year to rein in costs as a “very challenging” interest rate environment internationally is squeezing lending margins and income. Rival Bank of Ireland in contrast rose 1.7 per cent to €4.57.

Food giant Kerry was 1.5 per cent stronger at €111 ahead of results on Wednesday. Glanbia, meanwhile, rose 4.5 per cent to €10.57 after a difficult few weeks amid concern over the underlying health of the business.

Ryanair was marginally up at €13.53.

LONDON

Gains for oil majors and miners pushed London’s FTSE 100 into the black on Tuesday, buoyed by hopes of a trade deal between the United States and China, while Primark owner Associated British Foods jumped 6 per cent after strong results. The FTSE 100 advanced 0.3 per cent, after having touched a one-month high earlier in the session, while the mid-cap index was 0.2 per cent higher. AB Foods recorded its best one-day spike in more than 10 months after it posted higher annual earnings and said it was well positioned for further earnings growth in the new year.

Oil majors Shell and BP, which fell last week after reporting falls in profit, generated the biggest boost to the main index, rising about 1 per cent each.

EUROPE

The pan-European STOXX 600 index closed up 0.2 per cent at their highest since July 2015. Healthcare, utilities and real estate stocks, recorded some of the biggest losses on the day. Steep declines in some stocks after weak quarterly results, also limited gains. More than half of European companies have already reported results, with most of them beating analysts’ estimates.

Shares of Swiss airport retailer Dufry topped Stoxx 600 after reporting strong third-quarter results. But Pandora fell 17.6 per cent , its worst day in more than a year as it warned of a steeper-than-expected fall in sales this year.

German-Spanish company Siemens Gamesa tumbled 8.7 per cent to its lowest level since January after lowering its forecast for 2020. SAP dropped despite news that Europe’s most valuable tech company would return an extra €1.5 billion to shareholders next year.

NEW YORK

The three main US indices took a breather on Tuesday after expectations of a US-China trade deal propelled them to record highs in the previous session. The benchmark S&P 500 and Nasdaq indexes have risen in seven of the past 10 sessions.

On Wall Street, the Dow Jones Industrial Average rose 71.96 points, or 0.26 per cent to 27,534.07. The S&P 500 lost 0.31 points, or 0.01 per cent, to 3,077.96 and the Nasdaq Composite added 11.22 points, or 0.13 per cent, to 8,444.42.

A 2.53 per cent rise in Boeing’s shares provided a boost for the blue-chip Dow Jones index after chairman Dave Calhoun said the company’s board believed chief executive Dennis Muilenburg “has done everything right” following two fatal crashes involving its 737 MAX jet.

Adobe rose over 3 per cent as the Photoshop software maker raised its fourth-quarter digital media annualised recurring revenue target, supporting the Nasdaq. – Additional reporting Reuters

* This report was edited on November 6th