European stocks rise before US debt talks reach impasse

European stocks rose on Friday and Germany’s blue-chip index hit a record high as hopes of progress in US debt ceiling talks boosted risk sentiment, although negotiations appeared to have reached an impasse moments after markets closed.

Talks on Capitol Hill on raising the debt ceiling had appeared to be moving forward, with Democrat negotiators saying they made “steady progress” toward a deal that would avoid a default. However, the lead Republican negotiator later said talks had paused, with the White House saying a deal remains possible.

Dublin

The Iseq index edged 0.1 per cent higher, but its performance was dragged down by a 3.4 per cent fall for Ryanair, with the airline closing down at €15.64. The banks also had a weak session, with Bank of Ireland sliding 2.3 per cent to €8.99 and AIB down 1.4 per cent at €3.94.

But there were better fortunes for building materials group CRH, which nudged up 0.5 per cent to €46.15, and Paddy Power-owner Flutter Entertainment, which rose 1.9 per cent to €189.55.

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Insulation company Kingspan also added 1.9 per cent, closing at €65.10, while packaging group Smurfit Kappa finished up 1.2 per cent at €34.61.

London

The FTSE 100 gained 0.2 per cent on Friday as data showed domestic consumer confidence hit a 15-month high and the apparent progress on US debt ceiling negotiations buoyed sentiment. The FTSE 250 midcap index fell 0.1 per cent.

C&C Group tumbled 14.8 per cent after the drinks maker forecasted a one-off impact on profits in fiscal 2024 as one of the units had faced delays to integrate business management software.

Oil heavyweights Shell and BP gained 0.7 per cent and 0.2 per cent respectively, pushing the broader energy sector up 0.5 per cent as oil prices advanced over what appeared to be the fading risk of US debt default.

JD Sports Fashion slipped 7.8 per cent after US retailer Foot Locker trimmed its annual sales and profit forecast, with Adidas and Puma falling on the German market for the same reason.

Burberry lost 4.1 per cent after two brokerages flagged outlook concerns. The luxury fashion brand had reported stronger-than-expected fourth-quarter sales on Thursday, but showed weakness in the US.

Europe

The DAX, which houses Germany’s top 40 companies, closed 0.7 per cent higher after rising as far as 16,331.94 earlier in the day. The pan-European STOXX 600 index also rose 0.7 per cent to a more than one-year high, with financial stocks leading gains.

Shares of semiconductor companies such as AMS and Nordic Semiconductor rallied more than 5 per cent as Swiss and Norwegian markets reopened after Thursday’s holiday.

Troubled Swedish real estate group SBB fell 5.7 per cent after Goldman Sachs cut its price target by 50 per cent to 5 Swedish crowns. The stock has shed more than half its value this month on concerns about the group’s debt.

US

Wall Street’s main indexes erased early gains on Friday as US debt ceiling talks between the White House and House Republican lawmakers were paused, dampening hopes that a deal could be reached soon. News of the pause pushed the gauges lower amid nervy trading, while Federal Reserve chairman Jerome Powell said the after-effects of recent banking sector troubles takes some pressure off the US central bank to raise rates.

Morgan Stanley fell 2.1 per cent after chief executive James Gorman announced he would step down from the role in the next 12 months.

Foot Locker plunged 27.4 per cent after the footwear retailer cut its annual sales and profit forecasts. Its forecast weighed on Dow component Nike shares which fell 3.9 per cent, while Under Armour lost 5 per cent.

Additional reporting: Reuters