European stock markets continue upbeat start to the year

European shares closed higher for the third straight session on Wednesday as sentiment was boosted by an easing of the inflation rate in France, the euro zone’s second-biggest economy, and better-than-expected data on business activity.

New figures showed euro zone business activity contracted less than anticipated in December, suggesting the region’s recession may not be as deep as feared.

Dublin

The Iseq index climbed 2.5 per cent, continuing its upward momentum since the start of the year, with Ryanair adding 2.35 per cent to €12.85 on a strong day for airline stocks, while building materials group CRH advanced 3.4 per cent to €40.00.

Housebuilder Cairn Homes rose 7.5 per cent to just below 92 cent, while Glenveagh Properties added 4.5 per cent to about 90 cent. It was also a good session for packaging group Smurfit Kappa, which was up 4.3 per cent at €36.99 by the close, and Flutter Entertainment, which finished almost 3 per cent higher at €134.80.

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AIB edged up 0.4 per cent to €3.66, while Bank of Ireland closed 1.6 per cent higher at €9.31.

London

Britain’s main stock indexes closed higher with the FTSE 250 hovering near one-month highs. The exporter-heavy FTSE 100 rose 0.4 per cent, lagging its European counterparts. The more domestically focused FTSE 250 jumped 1.3 per cent with airlines Wizz Air Holdings and EasyJet soaring between 7 per cent to 10 per cent.

Gains on the FTSE 100 were capped by a 3 per cent slide each in BP and Shell as crude prices fell on concerns about weak demand due to the state of the global economy and China’s rising Covid-19 cases.

Supermarket chains Tesco and Sainsbury’s rose between 2 per cent and 4 per cent after data showed UK grocery sales rose 9.4 per cent in the four weeks to December 25th, with the increase driven by price inflation rather than higher levels of purchasing.

Europe

The pan-European STOXX 600 closed 1.4 per cent higher, while France’s CAC 40 jumped 2.3 per cent. Both indexes hovered at three-week highs.

Preliminary data showed inflation in France slipped in December from a record high in the previous month, tracking a slew of encouraging data from improving euro zone manufacturing numbers to a slowdown in Germany’s inflation.

European shares rose much more than Wall Street for the second straight session, in a sign that investors might be warming up to continental stocks. The STOXX 600 index has risen 3.6 per cent in the first three trading days of the new year, also helped by the easing of natural gas futures and hopes of a post-Covid recovery in China despite surging cases.

China-exposed luxury companies LVMH and Richemont rose 5 per cent and 2.4 per cent respectively, lifting the index.

Economy-sensitive financials such as banks and insurers also led gains in early trading. Switzerland-based energy company BKW rose 3.8 per cent after upgrading its 2022 outlook.

US

Wall Street’s main indexes reversed early losses on Wednesday, as investors looked past a set of economic data, with their focus squarely on the Federal Reserve’s December meeting minutes for clues on the outlook for interest rates.

US job openings in November indicated a tight labour market, giving the Fed cover to stick to its monetary tightening campaign for longer, while other data showed manufacturing contracted further in December.

Apple and Tesla bounced back from a searing drop in the previous session and rose 2.3 per cent and 5 per cent respectively.

Meanwhile, Microsoft dropped 4.3 per cent following a downgrade by brokerage UBS on worries over slowing growth for its cloud services and Office suite. Salesforce gained 3.4 per cent on the enterprise software firm’s workforce reduction plans.

Consumer discretionary and financial stocks led the gains among the major S&P 500 sector indexes.

– Additional reporting: Reuters