Stocks show modest gains amid record plunge in euro zone inflation

European stocks eked out modest gains on Friday after new figures showed euro area inflation plunged by the most on record. However, a new high for underlying price gains highlighted the tricky task facing the European Central Bank (ECB).

Similarly positive inflation data in the US also helped to propel the major Wall Street indices into positive territory.

Dublin

Broadly in line with other European indices, the Iseq was up by slightly more than 0.1 per cent in a volume-light session in Dublin, traders said.

Irish banks gave up some ground with Permanent TSB slipping 1.7 per cent to €2.31 per share while Bank of Ireland shed 1.4 per cent to €9.32 and AIB slipped 0.4 per cent to €3.74 per share. The wider European banking sector gave up about 0.5 per cent after the latest euro area inflation print, which showed a sharp drop-off in the rate of price increases last month, clouding the medium-term outlook for interest rates.

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Paddy Power owner Flutter was up 0.5 per cent to €167.65 per share. The other big names moving up the table were CRH, which rose more than 0.7 per cent to €46.48, and Ryanair, up more than 0.9 per cent to €14.88. Kingspan, meanwhile, improved by 0.2 per cent to finish the week at €63.04 per share.

London

Both the blue-chip FTSE 100 index and the mid-cap FTSE 250 gained 0.1 per cent, helped higher by tourism and travel stocks.

Aided higher by broker notes, Aer Lingus owner IAG was up 1.6 per cent on the session. Both Barclays and Deutsche Bank lifted their outlook for the stock, which bled through the wider sector with both Wizz Air and EasyJet adding about 3.5 per cent.

Package holiday giant Tui, meanwhile, down 5 per cent, compounded recent losses. In a generally poor session for financials, banks Lloyds, NatWest and HSBC gave back between 0.2 per cent and 1.2 per cent while insurers Aviva and Prudential were down 0.3 per cent and 1.1 per cent respectively.

Europe

The pan-European Stoxx 600 index and the blue-chip Stoxx 50 both added more than 0.6 per cent after Friday’s euro zone inflation print.

Consumer, fashion and luxury goods stocks felt the benefit of the latest data, which showed headline inflation plunging to 6.9 per cent in March from 8.5 per cent.

German sportswear giant Adidas was the biggest upward mover, up 5 per cent on the session. LVMH, meanwhile, was up more than 2 per cent while Hermes added 1.2 per cent and Pernod Ricard gained 1 per cent.

However, the data also indicated that core inflation, which strips out volatile energy and food costs, accelerated to an all-time high of 5.7 per cent in March. Speaking in Florence, ECB president Christine Lagarde said core inflation remains “significantly too high”, adding that Frankfurt has “ground to cover” to bring inflation back down to 2 per cent.

Still, traders are betting that the current cycle of increasing rates could be coming to an end with European banks Santander, BBVA and ING all down by between 0.5 per cent and 0.7 per cent on Friday.

New York

US equities extended the week’s rally after a key measure of US inflation cooled last month by more than expected, suggesting the Federal Reserve may be close to ending its rate-hiking campaign.

The S&P 500 rose 0.6 per cent, while the tech-heavy Nasdaq 100 gained 0.8 per cent, with the underlying index set for its strongest quarter since 2020.

Major growth names like Apple, Meta and Amazon gained between 0.3 per cent and 0.8 per cent. Meanwhile, Micron Technology dropped 3 per cent after news that China was set to review the chipmaker’s products sold in the country.

Virgin Orbit Holdings tumbled 40.8 per cent, a day after the rocket maker said it was cutting about 85 per cent of staff.

Companies linked to Donald Trump such as Digital World Acquisition and Phunware jumped 10.2 per cent and 3.4 per cent, respectively, amid retail investor interest, a day after the former president was indicted in a historic first. – Additional reporting: Bloomberg, Reuters