European shares edge higher in muted session as US investors enjoy holiday

European shares edged higher on Monday as a US holiday to mark President’s Day tempered volatility ahead of the release this week of minutes of the latest Federal Reserve meeting.

The pan-European Stoxx 600 index ended the session up 0.1 per cent at 464.46.

A surge higher in both stock and bond prices in the first six weeks of the year came to a halt last week after a flurry of US data suggested the world’s largest economy is holding up far better than expected, which means interest rates will have to rise further and take far longer to decline. Having dismissed warnings from US policymakers that inflation is too high and too persistent for comfort, investors are starting to accept they may have been overly optimistic in their assumptions.

Dublin

The Iseq All Share index moved 0.3 per cent higher to 8,247.50.

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Banking stocks were higher as investors positioned themselves ahead of full-year results from Irish lenders in the coming weeks, with Bank of Ireland rising 2.9 per cent to €10.06, while AIB added 0.3 per cent to €3.94 and Permanent TSB advanced 3.4 per cent to €2.45.

Dalata Hotel Group declined by 0.6 per cent to €4.03, gleaning little support from news after stock markets closed on Friday from data firm STR highlighting strong revenue per available room figures for Dublin and regional Irish hotels for January.

Malin rose 1.8 per cent to €7.90 as it continued to benefit from an announcement late last week that the life sciences investment company plans to buy back €140 million of its stock.

However, FBD dipped 0.8 per cent to €13.10 as it succumbed to some profit-taking following strong gains last week after the insurer said that its 2022 profits would be significantly ahead of market expectations.

Travel retail software group Datalex rose 4.1 per cent, albeit amid thin trading volumes.

London

The UK’s FTSE 100 nudged 0.1 per cent higher as strength in mining stocks lifted the commodity-heavy index, while Frasers Group jumped after the retailer announced a share buyback programme.

Frasers Group climbed 3.1 per cent after the sports goods retailer said it intends to commence a new share buyback programme.

Industrial metal miners rose 2.7 per cent as investors bet on a recovery in demand for copper and aluminium from top consumer China amid support from global mining supply disruptions. Mining giants Anglo American and Rio Tinto were up nearly 4 per cent and 3 per cent respectively.

“A lot of it is probably stemming from the reopening we’ve seen in China,” said Stuart Cole, head macro economist at Equiti Capital. “The anticipation is that if we see Chinese manufacturing activity pick up then we’re going to see increasing demand for commodities and we’re seeing it reflected in their stock prices.”

On the flip side packaging company DS Smith fell 4.9 per cent, its biggest one day drop in nearly seven months as Bank of America downgraded the stock, weighing on the FTSE 100.

The blue-chip index has risen nearly 7.5 per cent so far this year, hitting a series of record highs on the way, supported by upbeat earnings, a weak pound and rising commodity prices.

Among domestic stocks, Darktrace gained 3.5 per cent after the cyber security company said it had commissioned a third-party review of its finances weeks after a short-seller questioned its results.

Trifast plummeted 31.5 per cent after the designing and engineering company said earnings would be “significantly below” expectations.

Europe

Telecom Italia shares dropped 2.7 per cent as a government-sponsored offer rivalling KKR’s bid for the former phone monopoly’s prized grid failed to materialise over the weekend.

Austria’s Raiffeisen Bank International fell 2.3 per cent after Reuters reported the US sanctions authority launched an inquiry into the lender over its business related to Russia.

– Additional reporting, Reuters