European stocks up as markets expect Macron win
Oil prices continued to sag, erasing the gains made since a production cut last November
A trader works at the post where Biohaven began trading following its IPO on NYSE. Photograph: Reuters/Brendan McDermid
A string of positive corporate results boosted European stocks to fresh 20-month highs on Thursday, while the euro strengthened against the dollar as a pro-European Union centrist looked set to win the French presidency.
Oil prices, however, continued to sag, erasing the gains made since a production cut deal last November, pushing energy stocks lower.
Speculation that the US Federal Reserve would raise rates next month also intensified on foot of data showing new applications for US jobless benefits fell last week and the number of Americans on unemployment rolls hit a 17-year low.
Dublin’s Iseq tracked the upward momentum across Europe, rising 76 points to 7,065. In line with other financials, Bank of Ireland was up 4 per cent at 25 cents. Rival Permanent TSB, however, was flat at €2.45.
Ryanair was up another 1.3 per cent at € 16.72 following a strong session on Wednesday in the wake of positive passenger numbers.
Paddy Power Betfair was down again, shedding 3.6 per cent, to close the day at €96.04. Shares in the betting firm have been weak this week after new figures showed its profitability had been hit by punter friendly results in Cheltenham and at the US Masters.
Providence Resources was hit by the fall in oil prices, shedding 5 per cent of its value, to close at 19 cents.
Packaging giant Smurfit Kappa was up nearly 2 per cent at €25.45 in line with other firms in the sector. Insulation maker Kingspan was up by a similar margin at €32.99.
British blue-chip stocks rose slightly on Thursday but lagged European peers, with miners falling and retailer Next slumping as a difficult consumer environment bit into its profits.
The FTSE inched up 0.2 per cent, and was supported by gains among financial stocks which were led higher by a 2.8 per cent surge in HSBC after profits at the major bank beat expectations and its capital position improved.
The bank’s common equity tier 1 ratio, a measure of financial strength, was 14.22 per cent, up from 11.9 per cent in the same period last year.
Royal Dutch Shell shares inched up 0.3 per cent, paring earlier gains driven by a solid earnings update, as oil prices fell to their lowest since November.
A difficult environment for UK consumers weighed on clothing and homeware retailer Next, the biggest faller on the FTSE. Its shares sank 5.1 per cent, scoring their worst day since its January profit warning, after it further trimmed its 2017 profit guidance, saying shoppers were cutting back on spending. “This shows just how tough the high street is,” said Andrew Jackson, manager of Miton UK Value Opportunities fund. “Disposable incomes are being squeezed, and even the mighty Next has no way of countering these headwinds.”
The results had a ripple effect on peers Marks & Spencer and Sainsbury, which fell 2.5 and 1.6 per cent respectively. Next adds to growing concerns over a consumer squeeze which also hit carpet retailer Carpetright and Costa coffee owner Whitbread’s results last week.
European stocks rose as better-than-forecast results from companies including HSBC Holdings, Anheuser-Busch InBev NV and Royal Dutch Shell added to optimism for an earnings recovery in the region.
The Stoxx Europe 600 Index rallied 0.7 per cent to close at the highest level since August, 2015. The benchmark has gained 8.5 per cent this year, with annual profit at its members forecast to grow 14 percent.
Earnings dominated investor focus on Thursday, with HSBC up 2.9 per cent after posting a surprise increase in first-quarter profit. Anheuser-Busch InBev climbed 5.2 per cent after the world’s largest brewer reported earnings and sales growth that beat estimates.
France’s CAC 40 Index rose 1.4 per cent to close at a nine-year high following the TV debate between presidential candidates Emmanuel Macron and Marine Le Pen. Mr Macron was seen as the winner of the debate, according to an Elabe poll.
US stocks were lower in early afternoon trading on Thursday as a steep fall in crude oil prices weighed on energy shares and with healthcare stocks in focus ahead of a cliffhanger vote on repealing Obamacare.
The S&P healthcare index was up 0.5 per cent, the second-biggest increase among the 11 major S&P 500 sectors. The losers were led by the energy sector, which fell 2.24 per cent to its lowest level since August as crude oil prices slumped more than 4 per cent on fears of an oversupply.
Exxon and Chevron were among the biggest drags on the three major indexes. Facebook also weighed on both the S&P 500 and Nasdaq as its shares fell 1 per cent after the company’s outlook on advertising growth and expenses spooked investors. Apple was down 0.5 per cent, and was the biggest drag on the Nasdaq. At lunchtime the Dow Jones Industrial Average was down 49.08 points, or 0.23 per cent, at 20,908.82. The S&P 500 was down 2.16 points, or 0.09 per cent, at 2,385.97 and the Nasdaq Composite was down 5.10 points, or 0.08 per cent, at 6,067.45.