European shares rise on speculation of further stimulus

Investors weigh up chance that ECB will follow Fed and cut interest rates

The index was supported by a 1.75% rise for building materials group CRH, which closed at €32.05

The index was supported by a 1.75% rise for building materials group CRH, which closed at €32.05

 

European shares rose on Wednesday, with defensive sectors gaining the most as investors weighed up whether monetary stimulus would offset the economic impact of the coronavirus.

The US Federal Reserve’s move to cut interest rates on Tuesday sparked speculation that the European Central Bank will shortly do the same.

DUBLIN

The Iseq added 0.8 per cent, its second consecutive day of gains, with less volatility in the market than in recent sessions.

The index was supported by a 1.75 per cent rise for building materials group CRH, which closed at €32.05, as well as a small nudge up for Ryanair, which finished at €11.90, up 0.2 per cent, with the stock unaffected by reports of possible new coronavirus containment measures in Italy.

However, Hostelworld plunged 8.3 per cent to €96.30 after its earnings met expectations but it warned of the impact of the coronavirus on its business.

Glanbia fell 5.1 per cent to €10.90, erasing its gain in the previous session.

Paper and packaging group Smurfit Kappa rose, finishing up 2.7 per cent at €31.36, while food group Kerry added 1.6 per cent to €120.20.

Elsewhere, there were healthy volumes in the financial stocks: Bank of Ireland added 0.44 per cent to €3.21, while AIB added 0.2 per cent to €1.96 ahead of its full-year results on Friday.

LONDON

The Ftse 100 index rose 1.5 per cent as mining stocks and other export-heavy companies were also boosted by a dip in sterling. Luxury goods makers also recovered after being hit hard last month by fears of widespread disruption to supply chains.

Airline stocks including British Airways-owner IAG fell as the virus continued to spread in over 80 countries. The wider travel and leisure sub-sector has now fallen in eight of the past nine sessions.

Shopping centre owner Intu slumped 40.9 per cent to a record low as it scrapped a planned equity raise and said there was a risk it might breach some of its debt covenants this year.

Sausage-skin maker Devro gained 8.2 per cent after saying its China manufacturing plant was operating at normal capacity and had not faced labour or supply shortages due to the health crisis.

London-listed Irish company C&C Group rose 1.7 per cent after it was announced that it would takeover distribution of Budweiser beers in Ireland from Diageo in July.

EUROPE

The pan-European Stoxx 600 index rose 1.4 per cent, with the utilities and telecom sectors leading gains. The German Dax climbed 1.2 per cent, while the French Cac 40 added 1.3 per cent. Spanish and Italian stocks also rose.

Danish wind farm developer Orsted A/S surged more than 5 per cent, leading utilities higher after it upped its annual core earnings forecast.

Healthcare stocks jumped, with Roche Holding gaining more than 3 per cent after Chinese health authorities said it would use the Swiss pharma giant’s arthritis drug to treat some coronavirus patients in severe conditions.

German online food delivery company Hellofresh jumped 10.7 per cent, topping the Stoxx 600 as it extended gains following strong annual results.

US

Wall Street stocks rebounded as investors digested some surprise wins for Joe Biden in the US presidential primary and the potential for new moves worldwide to tackle the coronavirus fallout.

Equities got a boost after the Bank of Canada cut its benchmark, while speculation rose that the Bank of England and Europe would also take action.

Private healthcare companies such as UnitedHealth and Anthem, which have been under pressure due to the policy pledges of Biden’s rival candidate Bernie Sanders, saw their share prices surge as Biden’s chances of becoming the Democrat candidate improved.

Tech stocks recovered, with Apple up 2.5 per cent and Amazon. com up 1.8 per cent in early trading. – Additional reporting: Reuters, Bloomberg