Healthcare and consumer stocks boost European markets

Healthcare and consumer stocks helped boost European markets yesterday, leaving some commentators speculating that low interest rates were encouraging spending.

DUBLIN

Real estate investment trust Hibernia Reit shed 1.01 per cent to close at €1.374 after announcing a number of developments ahead of its annual general meeting in Dublin yesterday.

The company said that it has let the remaining space in its refurbished One Dockland Central building to the State's Commission for Communications Regulation on a 20-year lease at an initial rent of €1.6 million a year.

Its stock was down 1.3 per cent at one point before paring back some of those losses. Investors sold more than 1.76 million of Hibernia Reit’s shares in Dublin on Tuesday. Its peer, Green Reit, was unchanged at €1.49.

Among the market's leading stocks, Paddy Power Betfair was down 1.34 per cent. British regulators signalled that the merger of rivals Ladbroke and Gala Coral could ahead if the pair agreed to sell up to 400 shops.

Ryanair shed some of the 6 per cent gain made on Monday and dipped 1.29 per cent to close at €11.485.

International packaging giant Smurfit Kappa climbed 1.72 per cent to €22.50 ahead of results.

LONDON

Irish convenience foods group Greencore closed 3.33 per cent down at 310.8 pence sterling after quarterly figures showed that its sales momentum was slowing.

British equities rose for the second time in three days amid gains in miners and BT Group. Fresnillo, BHP Billiton and Rio Tinto Group climbed more than 3 per cent. BT rose 3.2 per cent as regulator Ofcom rejected calls for a breakup of the company.

GKN added 3.8 per cent and Provident Financial jumped 5.7 per cent after reporting results, while Mondi gained 4.3 per cent as it said it sees a rise in underlying operating profit.

BP fell 1.3 per cent after reporting a slump in profit due to weak refining margins and oil prices. The oil company also cut its 2016 investment budget to below $17 billion (€15.5 billion).

Tesco dropped 4.1 per cent as researcher Kantar Worldpanel said sales declined in the 12 weeks to July 17th.

Housebuilders, however, were the biggest laggards, with Taylor Wimpey, Berkeley Group, Barratt Developments and Persimmon all down between 2.5 per cent and 3.3 per cent after Deutsche Bank cut its price target on all four stocks, citing Brexit uncertainty for a reduction in their forecasts for the sector.

The FTSE 100 Index added 0.2 per cent at the close of trading in London. The gauge has alternated between daily gains and losses since last week, halting the strong rally that followed the slump after the vote to leave the European Union.

Bank of England policymaker Martin Weale said Brexit has rattled the economy more than he anticipated and indicated he favours immediate stimulus.

EUROPE

Healthcare stocks outperformed to add the most points to the market, with Danish insulin-maker Novo Nordisk climbing 2.9 per cent after brokerage Nordea forecast another boost for the company's Victoza diabetes product.

Some consumer goods and leisure stocks also outperformed, with Hermes, drinks-maker Campari and sportswear company Adidas all touching record highs.

Traders suggested that record low interest rates in the euro zone were helping consumer goods companies as lower rates could encourage people to spend more in spite of the weakening economic outlook caused by Brexit.

Banks have been the worst sectoral performer this year due to concerns over capital being squeezed by margin pressure caused by extremely low interest rates. Commerzbank shares fell 4.5 per cent after the German lender posted a decline in second-quarter core capital.

The FTSE Italia All Share Banks index also dipped 0.3 per cent, with the gauge down around 50 per cent in 2016 due to worries about Italian banks’ bad debts.

Shares in Italian bank Monte dei Paschi fell 1.2 per cent, with a source telling Reuters that Monte dei Paschi was working on a €5 billion capital increase as part of plans to fix its balance sheet.

AMS rallied 12 per cent after the semiconductor company posted better-than-estimated profit and forecast an increase in sales.

Orange fell 3.7 per cent after posting a decline in French mobile service revenue and quarterly earnings that matched projections. Michelin & Cie climbed 1.5 per cent after its first-half operating profit beat analyst estimates.

Mediaset tumbled 6.9 per cent after Vivendi SA said it's pulling out of a deal to buy the Italian company's pay-TV unit.

NEW YORK

US stocks swung between small gains and losses on Tuesday afternoon as mixed earnings reports kept investors on the edge ahead of the Federal Reserve’s two-day policy meeting and Apple’s results.

McDonald’s dropped 4.3 per cent to $121.89 after the restaurant chain’s comparable sales missed analysts’ expectations. The stock weighed the most on the Dow.

Gilead fell 8 per cent after the drugmaker cut its full-year sales forecast, attracting a host of price target cuts.

Caterpillar’s shares jumped 4 per cent to touch a year high after the company’s quarterly earnings beat expectations. The stock was the top gainer, boosting the Dow.

Texas Instruments rose 7.2 per cent after its current-quarter forecast beat analysts' estimates. The stock provided the biggest boost to the S&P.

–(Additional reporting: Bloomberg, Reuters)