European shares advance on strong corporate earnings

Iseq creeps up with Smurfit jumping 4.7%

European shares rose on Friday, recovering from earlier weakness, as investors were encouraged by strong corporate earnings, even as fresh data showed that the euro-zone economy was broadly stagnant during the three months of the year.

The pan-European Stoxx 600 index gained 0.6 per cent.


The Iseq All Share index added 0.8 per cent to 8,432.

Smurfit Kappa jumped 4.7 per cent to €32.64 after the paper packaging group reported its earnings had risen 13 per cent in the first quarter and it flagged that its strong balance sheet meant that it had “never been better positioned to continue to develop and take advantage of opportunities as they present themselves either through organic investments or acquisitions”.


Kingspan shares advanced 3.4 per cent to €49.18 as some analysts signalled they would be raising their estimates for the insulation group, which guided that its trading profit would decline 8 per cent this year to just over €400 million. Davy analysts had pencilled in a figure of €375 million.

Banking stocks were out of sorts as sector followers monitored developments at ailing US lender First Republic Bank. AIB closed down 1.6 per cent at €3.89, while Bank of Ireland dipped 3.2 per cent to €9.37.


The FTSE 100 index edged 0.5 per cent higher to finish at 7,870, marking a return to gains after four consecutive days of decline.

Positive earnings updates for Prudential and Pearson helped guide the market higher despite a weaker showing for NatWest, which weighed down on other major banking stocks.

NatWest finished 4 per cent lower despite operating profits rising by more than 50 per cent to £1.8 billion (€2 billion) for the first three months of the year. Revenues also surpassed expectations for the quarter but investors were left unimpressed by another drop in customer deposits, even if some of that was down to its Ulster Bank unit pushing customers to find new homes for their banking.

Elsewhere in finance, corporate banking group Numis saw shares rocket by two-thirds after agreeing a £410 million takeover deal from Deutsche Bank.

Prudential shares climbed 3.5 per cent after the London-listed insurer said sales and profits had increased significantly as a result of easing pandemic restrictions in China.

Guinness’s parent, Diageo, lost 1.5 per cent after key rival Remy Cointreau delivered a disappointing sales outlook amid weak demand in the United States.


Swedish real-estate group SBB slid 6.7 per cent after the company’s first-quarter net asset value fell 17 per cent.

Mercedes-Benz Group crept 0.7 per cent higher as the luxury car maker lifted its outlook for the annual adjusted return on sales of its vans division.

Electrolux jumped 15.5 per cent after the Swedish home appliances maker posted sales and operating loss in first quarter above market expectations.

Barring last month, when the collapse of two US regional lenders sparked concerns of a global banking crisis, European stocks have risen about 8.7 per cent in 2023 so far.

New York

On Wall Street, equity markets were struggling to carve out a clear path in early afternoon trading, as market participants digested a spate of mixed corporate earnings and data that confirms that while inflation is cooling, it remains well above the Federal Reserve’s target.

The S&P 500 and the Dow were modestly higher but pulled the Nasdaq into negative territory, with each index poised to notch modest weekly gains.

Economic data released before the bell confirmed that inflation is falling but remains more than double the Federal Reserve’s average annual goal of 2 per cent, and did little to move the needle regarding market expectations of another 25 basis-point interest rate hike when the central bank meets next week.

Meanwhile, the economic outlook is uncertain, with a weaker than expected first-quarter US gross domestic product reading and warning of a potential slowdown echoing those uncertainties and weighing on the stock.

Oil prices rose but remained on track for a monthly decline amid signs of an economic slowdown. – Additional reporting: Reuters, PA

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times