European shares edge down as geopolitical tensions weigh

European shares edged lower on Monday as rising government bond yields and concerns over the Israel-Hamas war kept investors on edge, while Italy’s FTSE MIB index was among top gainers across the regional markets.

The pan-European Stoxx 600 ended 0.1 per cent lower after declines of over 3 per cent in the previous week.

While European Union leaders are set to call for a “humanitarian pause” in the Israel-Hamas war so aid could reach them, Israel continued its bombardment of the besieged enclave.

Washington warned of a significant risk to U.S. interests in the Middle East as Israel bombarded Gaza with air strikes.

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Adding to the pressure, the yield on the benchmark 10-year US Treasury note rose above 5 per cent on Monday before paring gains, ahead of key gross domestic product and inflation data from the country later this week.

“The GDP (data) is likely to show quite a robust third quarter and add to expectations that the Fed will keep rates in restrictive territory for longer,” said Laura Cooper, senior macro strategist for iShares EMEA at BlackRock.

Dublin

The State’s three main banks saw their stock values decline as sentiment across the sector globally dipped on the back of poor US earnings.

AIB, Bank of Ireland and Permanent TSB fell by 1-1.4 per cent on a weak trading day for the financials. PaddyPower Betfair owner Flutter bucked the downward trend on markets, rising nearly 5 per cent to €148.80 after the company announced unveiled a collaboration with the UK’s ITV to present a six-part documentary series focused on British horseracing in 2024.

Ryanair also posted a strong gain, rising 1.7 per cent to €14.56 after announcing 18 routes from Shannon Airport. Food giant, Kerry, also posted gains with the company’s shares almost 3 per cent to €73.14.

Europe

Miners shed 1.1 per cent as prices of most base metals took a hit from geopolitical tensions, while rate-sensitive real estate stocks hit their lowest level since 2012, before paring declines. The sector ended 0.6 per cent down.

Italy’s FTSE MIB index was among few gainers across the region, up 0.7 per cent, boosted by a 2.6 per cent rise in UniCredit as the lender planned to buy a 9 per cent stake in Alpha Bank.

Among other movers, Volkswagen slipped 0.9 per cent, falling as much as 3.2 per cent to its lowest since April 2020 after the carmaker cut its profit margin outlook for the current year on Friday.

Philips fell 2.0% after the Dutch health group reported a drop in third-quarter orders.

Limiting losses in the healthcare sector, Indivior jumped 5.2 per cent after the drugmaker said it will pay $385 million to settle a lawsuit related to its opioid addiction treatment.

Getinge rose 3.8 per cent after the Swedish medical gear maker beat quarterly sales expectations.

London

London’s markets dropped as sentiment was knocked by another rise in UK and US bond yields, with the FTSE 100 closing at its lowest level for almost two months.

Housing stocks were among the day’s notable fallers as Vistry Group became the latest listed developer to warn over profits due to the challenging market, weighing on investment in the sector.

The FTSE 100 moved 0.37 per cent, or 27.31 points, lower to finish at 7,374.83.

Michael Hewson, chief market analyst at CMC Markets UK, said: “At one point it looked as if markets in Europe were going to open higher in the wake of the start of aid convoys into Gaza over the weekend, however a combination of rising yields, and concerns over the prospects for global growth saw markets initially slide into the red.

“Sentiment has stabilised a touch in the afternoon session as yields retreated from their intraday highs, and while the Dax and FTSE 100 have struggled, the CAC 40 edged into positive territory, making it very mixed session for European stocks.”

New York

US stocks reversed course to rise on Monday as bond yields pulled back after hitting the crucial 5 per cent mark earlier in the session, while investors awaited earnings from the world’s largest technology companies and key economic data.

The benchmark S&P 500 index bounced above 4200, a key technical level, after falling almost a per cent during the open.

The yield on the 10-year note touched the July 2007 milestone that it briefly attempted to scale last week, but retreated to 4.8629 per cent, down 6 basis points.

Bill Ackman’s hedge fund Pershing Square Capital Management has covered its bond short position, the billionaire investor posted on messaging platform X, saying it was too risky to remain short on bonds at current long-term rates.

Focus continues to be on the positive earnings season. Microsoft, Alphabet, Amazon and Meta Platforms, which have helped power the S&P 500 higher in 2023 while the other indexes lagged, report later this week.

“No matter what results we see from big tech earnings this week, the results won’t justify their outlandish valuations,” said David Bahnsen, chief investment officer at The Bahnsen Group.

“Even with the declines in big tech stock prices over the past three months, they are still too expensive.”

Chipmaker Intel, oil major Exxon Mobil, General Motors are among other major companies set to report results this week.

Additional reporting by Reuters