European shares cap strong weak with Friday rebound

European stock indices rebounded on Friday, reversing Thursday’s declines as traders bet on faster interest rate cuts next year.

Money markets have priced in a full percentage point of interest-rate cuts in 2024 against the backdrop of sputtering economies across Europe.

Dublin

Largely driven by optimism about the path for interest rates and inflation, the Iseq index capped what traders called a “great week” for Irish shares, adding just over 1 per cent on Friday.

Cairn Homes advanced 4.3 per cent to close the week out at €1.26 per share. Glenveagh also moved close to 3 per cent higher to €1.06 in line with a similar moves across the European house-building sector, which has been boosted by the increasingly promising outlook for inflation.

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Flutter Entertainment added a further 2 per cent to trade at €145 per share by closing bell in Dublin. The Paddy Power owner has recovered some of the ground lost since lowering its full-year forecasts in early November but the shares remain around 8 per cent cheaper than they were at the start of last week.

Trading strongly of late, the Irish banks also saw gains on Friday, albeit slightly more meagre ones than seen over recent sessions. Bank of Ireland jumped by close to 1 per cent to almost €8.60 per share with AIB up more than 1 per cent to €4.19 per share. PTSB shed slightly more than 0.5 per cent on much lower volumes than its rivals.

Ryanair also finished in the green, up 1.1 per cent to €17.48 per share in line with its European and UK peers.

Europe

With evidence building that the European Central Bank’s aggressive string of rate hikes is starting to take a toll on the economy, traders increased bets on large interest rate cuts in 2024. The blue-chip Stoxx 50 index finished the session up 0.9 per cent while the cross-Continent Stoxx 600 index added close to 1 per cent.

One week out from black Friday, consumer and luxury brands were among the bigger winners. Adidas shares jumped by close to 1.8 per cent while fashion stable Kering added 1.4 per cent. Luis Vuitton owner LVMH and Ray-Bans-maker Essilor Luxottica also saw gains.

Siemens added further momentum, gaining 1.4 per cent after the 5.7 per cent jolt the stock received following the release of the German industrial giant’s fourth quarter results.

London

UK stocks saw a similar bounce with traders increasingly optimistic about the prospect of Bank of England easing over the coming months after weaker-than-forecast British retail sale numbers. Both the benchmark FTSE 100 and the mid-cap FTSE 250 advanced by around 1.2 per cent.

Shares of the London Stock Exchange Group reversed course to add 1.6 per cent after the Stock Exchange operator raised its midterm growth guidance and said it would return £1 billion (€1.14 billion) to shareholders in 2024.

AstraZeneca rose by close to 1 per cent after the U.S. health regulator approved its Truqap in combination with an older drug, providing another treatment option for patients with the most common type of breast cancer.

FirstGroup climbed 1.4 per cent to touch over a 10-year high after the transport operator said it will form a joint venture with Japan’s Hitachi for leasing up to 1,000 electric bus batteries for about £100 million.

New York

Wall Street’s main indices were comparatively sluggish, with the Nasdaq Composite, Dow Jones Industrial Average and S&P 500 all essentially flat by close in Dublin.

Megacap stocks were mixed, with Microsoft and Tesla falling over 1 per cent.

Adding to the pressure, Applied Materials shares lost 4.4 per cent on news that the semiconductor equipment maker was under an investigation. The largest US semiconductor equipment maker is being probed by the US Justice Department for sending equipment to a Chinese company via South Korea without export licenses, sources told Reuters.

Among other movers, Gap surged 29.9 per cent as the apparel retailer posted better-than-expected third-quarter results due to improving sales at Old Navy and easing supply expenses.

Wall Street’s three main indexes were poised to gain nearly 2 per cent for the week, on course for their third straight week of gains. – Additional reporting: Bloomberg, Reuters