Markets

European shares rise as investors reckon hard Brexit is less likely

FTSE 100 falls after pound strengthens, while US banks deliver upbeat earnings

Paddy Power Betfair rose almost 2 per cent to €70.50.

Wed Jan 16 2019 - 18:20

European shares closed the day in positive territory on Wednesday as British prime minister Theresa May’s resounding defeat in a parliamentary vote on her Brexit deal gave a boost to continental banks.

Investors were betting that a soft or postponed Brexit is now more likely, despite the uncertainty ahead of a no-confidence vote in May’s government after the close of markets.

However, the exporter-laden FTSE 100 fell as sterling climbed.

Dublin

The Iseq climbed 1 per cent amid more positive market sentiment. Datalex, which plunged 59 per cent during Tuesday's session after it emerged that it may have mis-stated its first-half profits, made a partial recovery, rising 15 per cent to €1.15.

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Ryanair also clawed back some modest ground, adding 0.5 per cent to €10.09, while Paddy Power Betfair rose almost 2 per cent to €70.50. Building materials group CRH finished 0.45 per cent higher at €24.73.

On a good day for financial stocks across Europe, Bank of Ireland added almost 4 per cent to finish at €5.39. Cairn Homes was a little softer, declining 0.7 per cent to €1.21, while paper and packaging group Smurfit Kappa closed down 0.4 per cent at €24.40, but most of the other fallers had thin trading volumes.

London

The FTSE 100 ended 0.5 per cent lower as its internationally exposed stocks were hit by the strengthening of sterling .

Weak results weighed on education publisher Pearson, which fell 5.9 per cent after it pointed to weaker-than-expected revenues in its full-year outlook. Analysts said the company's profit forecasts, which remain in line with expectations, were only possible because of cost cuts, with the US market likely to remain negative for the company.

Investors shunned consumer staples, which earn a big portion of their revenue abroad in foreign currency, with Unilever and Diageo dragging on the index. Heavyweight oil and gas stocks were down 1.5 per cent. The domestically focused mid-cap index gained 0.3 per cent.

Housebuilders led the risers, with Bovis Homes providing additional cheer after it forecast better-than-expected full year profits. Taylor Wimpey topped the FTSE 100 leader board, while Persimmon, Barratt and Bovis were all at two-month highs.

Europe

The Euro Stoxx finished the session up 0.5 per cent, with most indexes on the continent in the black. The German Dax was up almost 0.4 per cent, while the French Cac 40 advanced 0.5 per cent.

Euro zone banks shares were the biggest boost to indexes, rising 2.4 per cent to their highest in over a month. The rally in Italian banks, led by Unicredit up over 10 per cent, helped Milan's FTSE MIB outperform peers with a 1.6 per cent rise.

Deutsche Bank shares spiked higher in afternoon trading after a report said regulators would prefer the German lender to merge with a European rival rather than local competitor Commerzbank. Deutsche Bank closed 8.4 per cent higher, while Commerzbank rallied 7.4 per cent.

Danish freight company DSV climbed 5.8 per cent after it made a bid for Swiss logistics company Panalpina valuing the company at $4.1 billion. Panalpina shares soared 27.7 per cent.

New York

Bank shares drove Wall Street's main indexes to a one-month high on Wednesday after strong earnings from Bank of America and Goldman Sachs.

Goldman Sachs climbed 7.3 per cent in early trading after topping quarterly revenue estimates on strength in equity trading, while Bank of America also posted similar gains after reporting a better-than-expected quarterly profit on its loan book.

Adding to the upbeat mood was a $22 billion buyout offer by financial technology provider Fiserv for First Data, the largest deal in the financial technology sector. First Data shares soared 18.3 per cent, while those of Fiserv fell 6.3 per cent. – Additional reporting: Reuters / Bloomberg.

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