Stocks rise on earnings as sterling falls

Smurfit Kappa rises 5 per cent, Dublin financials also buoyed

A host of upbeat earnings pushed US stocks higher on Tuesday and world stocks rose in anticipation of central bank easing, while sterling fell on the expected confirmation of hard-Brexit advocate Boris Johnson as Britain's next prime minister. Dow components Coca-Cola and United Technologies both beat second-quarter earnings expectations as the reporting season shifts into high gear. "You're having good results from a variety of companies and that has put a positive spin on the opening," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. The International Monetary Fund cut its global growth forecast through 2020 over concerns about the protracted tariff spats between the United States and its trading partners and the prospect of a disorderly Brexit.


The Iseq ended the session up 0.6 per cent at 6,233, which was roughly in line with other European bourses. Smurfit Kappa was the main springer in the market, rising 5 per cent to €29.96. The cardboard box-maker was said to have been buoyed by positive news for the sector. Financials across Europe were also strengthened by likelihood of more policy easing from the European Central Bank (ECB). This saw Bank of Ireland and AIB rise 1.3 per cent and 1.1 per cent respectively. Ryanair, meanwhile, traded flat at €10.40 despite plans to buy the controversial Boeing 737 Max aircraft, which analysts believe could lead to a customer boycott. Property reits were also buoyed ahead of mortgage data from the Banking and Payments Federation Ireland with Hibernia and Yew Grove marginally up.


Britain's FTSE 100 hit its highest level in more than two weeks on Tuesday, helped by broad gains on a combination of generally positive corporate results from Wall Street and Europe and bets that major central banks would cut interest rates soon. The main index jumped 0.6 per cent as its internationally-exposed stocks gained on a weak sterling after Eurosceptic Boris Johnson won the Conservative Party leadership, clearing the way for him to become prime minister. Asia-focused banks HSBC and Standard Chartered rose more than 1 per cent each, while oil majors also boosted the index.

Though largely robust earnings on Wall Street kept the general mood bright, data from Refinitiv showed that companies listed on the pan-European Stoxx 600 index were expected to report a modest drop in second-quarter earnings, compared with a modest gain estimated a week ago. If that materialises, it would be the first back-to-back quarterly earnings decline since the second and third quarters of 2016, marking an earnings recession. Blue-chip supermarket chains shed between 0.5 per cent and 2.3 per cent after data from market researcher Kantar showed sales at all of Britain’s big four supermarket groups fell in the latest 12-week period.



The pan-European Stoxx 600 index rose 1.2 per cent, helped by a 6 per cent surge in carmakers and growing certainties of policy easing from the ECB and the US Federal Reserve. Auto stocks led gains among major sectors, led by French supplier Faurecia's 7.6 per cent jump after it maintained first-half profitability. Car parts supplier Continental rose 4.8 per cent and lifted peer Hella, despite issuing yet another warning. Spanish bank Santander rose 3. 6 per cent to €4.13 despite reporting an 18 per cent fall in quarterly net profit. The lender was hurt by one-off restructuring costs from its acquisition of Banco Popular and a weak performance in Britain.

New York

US stocks rose on Tuesday, boosted by upbeat earnings and forecasts from Coca-Cola and United Technologies, while a two-year debt ceiling and budget deal between US president Donald Trump and Congress buoyed sentiment. Coca-Cola shares rose as much as 5.7 per cent to hit a record high, after the fizzy drink maker beat quarterly earnings expectations and raised its full-year organic revenue forecast. Fellow Dow component United Technologies gained 1.5 per cent, after raising its full-year profit and sales outlook.

The overall profits of S&P 500 companies are now expected to rise about 1 per cent in the second quarter, according to Refinitiv IBES data, improving from a small decline estimated previously. Travelers Cos fell 2.5 per cent after the insurer's second-quarter profit missed estimates, as weather-related losses led to an 18 per cent drop in underwriting gain. Hasbro jumped 7.1 per cent and was the biggest gainer among S&P 500 companies, after the toymaker reported better-than-expected quarterly revenue. – Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times