European shares rally as US eases Huawei restrictions

Markets report: CRH, Smurfit and AIB gain as Bank of Ireland and PTSB lose ground

AIB was in demand, rising 2.5 per cent at €4.07, as details of a planned €1 billion non-performing loan portfolio sale emerged.

AIB was in demand, rising 2.5 per cent at €4.07, as details of a planned €1 billion non-performing loan portfolio sale emerged.

 

European shares rallied on Tuesday, following two sessions of losses, as investors technology stocks took heart as the United States moved to temporarily ease restrictions on China’s Huawei.

The US allowed Huawei Technologies to buy US-made goods to maintain existing networks and provide software updates to existing Huawei handsets until August 19th after blocking it from buying US goods last week.

The pan-European Stoxx 600 gained 0.5 per cent, with Germany’s trade-sensitive DAX rising 0.per cent.

Dublin

The Iseq index added 0.14 per cent to 6,231,93, with trade- and economic growth-sensitive stocks such as CRH, up 0.5 per cent at €28.70, and Smurfit Kappa, up 2.3 per cent at €25, among the main risers.

AIB was also in demand, rising 2.5 per cent at €4.07, as details of a planned €1 billion non-performing loan portfolio sale emerged. However, rivals Bank of Ireland and Permanent TSB lost ground.

Dublin-based but London-listed UDG Healthcare jumped 6.8 per cent to £7 as investors cheered two earnings-enhancing acquisitions, amounting to $106 million (€95 million), announced by the group.

London

The FTSE rose 0.3 per cent, helped by a rally in homebuilders amid news of a proposed parliamentary vote on a second Brexit referendum.

After weeks of waiting for significant updates on Brexit, investors welcomed a “new deal” for Britain’s departure from the European Union set out by prime minister Theresa May, which offered the prospect of a possible second referendum on the agreement.

That thrust housebuilders 1.2 per cent higher, their biggest one-day rise in a month. Persimmon and Taylor Wimpey were among top gainers on the main index.

Heavyweight financial groups HSBC, Prudential and Standard Chartered also offered support as markets hoped that trade tensions between Washington and Beijing would ease after the US eased restrictions on Huawei.

Shares of Lloyds Banking Group and Barclays gained as Tesco’s decision to stop mortgage lending raised the prospect of reduced pressure on margins, due to lesser competition.

Europe

The tech sector rose 1.6 per cent, making back a chunk of Monday’s 2.8 per cent slide. Chipmakers Infineon Technologies, AMS and STMicroelectronics gained between 1 per cent and 4.2 per cent.

Telecom Italia rose 2.3 per cent as it posted first-quarter results and confirmed its guidance for the next three years. The firm’s chief executive said it was in touch with five banks over plans to create a joint venture to offer consumer credit services.

Norsk Hydro climbed 5.6 per cent as a Brazilian federal court allowed the Oslo-traded firm to resume full output at the world’s largest alumina refinery for the first time in more than a year.

However, stocks are not yet out of the woods, still plagued by investor uncertainty regarding the US-China trade war.

“We’ve had a very powerful rally [in the year to date] and if there is a continued escalation or a failure to resolve where we go from here, there is certainly downside in equity markets,” said Simon Webber, lead portfolio manager on the global and international equities team at Schroders.

New York

Technology stocks also fuelled a rebound on Wall Street, with chipmakers, which bore the brunt of Monday’s sell-off, leading the way.

The Philadelphia Semiconductor Index gained and was on track to end a three-day slump. Shares of Huawei suppliers such as Intel, Qualcomm, Xilinx and Broadcom rose.

However, Kohl’s plunged after the department store operator cut its full-year profit forecast and reported quarterly same-store sales and profit that missed expectations.

Rival JC Penney fell after the company reported a bigger-than-expected fall in quarterly comparable-store sales.

Home Depot shares dipped after the home improvement chain reported its slowest growth in quarterly same-store sales in at least three years.

With over 460 of S&P 500 companies having posted first-quarter results, 75 per cent have topped analysts’ profit expectations. – Additional reporting: Reuters