Oil rally drives European shares higher
Trump’s decision to pull US out of Iran’s nuclear agreement boosts crude prices
Wall Street was higher, with energy shares getting a boost from a surge in oil prices after US president Donald Trump pulled the country out of a nuclear deal with Iran
European shares were supported on Wednesday by strength in oil stocks after US president Donald Trump pulled the United States out of Iran’s nuclear agreement, boosting crude prices. While some well-received earnings updates also provided support to the overall market, shares in companies with exposure to Iran fell, with plane maker Airbus and car makers Renault and PSA all falling. The pan-European STOXX 600 index ended the day up 0.6 per cent at fresh three-month highs, while higher crude prices helped the commodities-heavy FTSE 100 outperform, up 1.3 per cent. The oil and gas index was the biggest sectoral gainer, surging up 2.9 per cent to a three-year high as crude rallied after Trump’s move on Iran raised the risk of conflict in the Middle East and cast uncertainty over global supplies.
Dublin’s Iseq rose 34 points to 6,983, tracking the uplift across Europe. Bank of Ireland and AIB rose 2.5 per cent and 2 per cent respectively as financials and oil-related stocks shored up markets generally. Unsurprisingly Ryanair fell 2.4 per cent to €15.62 on foot of rising oil prices, which will ultimately drive fuel costs higher for the airline.
Swiss-Irish food giant Aryzta gave back some of the gains in the previous session, falling 2.5 per cent to €18.52. Building materials group CRH, which has significant operations in the US, rose 1 per cent to €30.94.
PaddyPower Betfair rose 2.3 per cent to €80.90 while insurer FBD fell nearly 1 per cent to €10.90.
Oil stocks drove Britain’s leading stock index sharply higher on Wednesday after the US decision to pull out of the Iran nuclear deal sent crude prices soaring. The FTSE 100 index jumped 1.3 per cent, easily beating other European bourses as commodities stocks surged and strong results sent tobacco firm Imperial Brands up. It was the index’s best day in a month. Oil majors Royal Dutch Shell and BP, up 3.1 per cent and 3.3 per cent respectively, delivered the biggest boost to the index as oil prices rose more than 2 percent.
US sanctions against Iran, an Opec member, are expected to tighten global oil supply. Leading the FTSE was heavyweight tobacco firm Imperial Brands, which jumped 6.2 per cent after pledging to step up divestments and reporting first-half sales and profits slightly ahead of estimates.
Fashion house Burberry was the worst performer, down 6.1 per cent after Belgian billionaire Albert Frere’s Groupe Bruxelles Lambert (GBL) sold its entire stake, amounting to 6.6 per cent of Burberry’s shares.
The travel sector was the worst-performing, down 1 per cent as Europe’s largest travel and tourism group TUI Group also declined 1.6 per cent after an uninspiring earnings update. Among result beats, Siemens shares rose 3.9 per cent after the German industrial giant raised its full-year profit guidance, offsetting worries over exposure to Iran.
Analysts at Jefferies reiterated their buy rating on the stock, saying the quarterly performance of Siemens was strong apart from the results of its power and gas (PG) business. The world’s largest brickmaker, Wienerberger, rose 7.2 per cent after saying it expected to meet full-year earnings estimates thanks to strong demand from Eastern Europe.
BPER Banca became the latest Italian bank to report, its shares rising 8.3 percent after strong results. Some disappointments sent shares sliding. ProsiebenSat1 sank 9.3 per cent after the German broadcaster said profitability would dip over the summer.
Wall Street was higher, with energy shares getting a boost from a surge in oil prices after Trump pulled the US out of a nuclear deal with Iran.
The S&P energy index rose 1.9 per cent after oil prices hit their highest levels in 3.5 years as investors worried that the president’s decision would increase risks of conflict in the Middle East and curtail oil supplies in a tight market. The energy sector has risen more than 10 per cent so far in the quarter, far outperforming the other major S&P indexes. However, a 3.5 per cent drop in Walmart limited gains on the Dow after the retailer took a majority stake in Indian ecommerce firm Flipkart for about $16 billion.
The yield-sensitive utilities and telecom services were down about 0.7 per cent each. Walt Disney dipped 2.1 per cent. The media company, which is in the process of buying film and TV assets from Twenty-First Century Fox, reported quarterly profit that topped Wall Street forecasts. – Additional reporting by Reuters