World shares struggled to climb on Monday after the chances of early interest rate cuts globally receded and Chinese markets recorded modest gains on their return from the lunar new year break.
A holiday for US markets made for thin trading, and results from AI star Nvidia on Wednesday could challenge the latest surge in tech stocks. Earnings updates this week from heavyweight companies, including HSBC bank and retail giant Walmart were also hotly anticipated.
MSCI’s broadest index of world shares was broadly flat. In Europe, the Euro Stoxx 50 was marginally down.
“The mixed economic data released lately has put us in a transition period and we are waiting for the data to tell a consistent story,” James Rossiter, head of global macro strategy at TD Securities, said.
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A red-hot US consumer price index print on Tuesday followed by another upside surprise in producer prices on Friday left investors anxious inflation will persist. A weaker retail sales report, suggesting slower economic momentum augmented their concerns. However, US labour market numbers have continued to show plentiful jobs and elevated wage growth.
In Asia, Japan’s Nikkei ended flat on Monday, pressured by chip-related shares following a slump in their U.S. counterparts late last week.
Dublin
AIB jumped almost 4 per cent to close at €4.21 despite the unclear path for inflation and interest rates internationally. Domestically the lender appointed Paul Travers to steer a new strategy which places an enhanced focus on greening the bank’s loan book by increasing its funding capability for significant sustainable infrastructure projects. Rival Bank of Ireland rose by a more modest 0.8 per cent to €8.52 while the Permanent TSB had a poor session, dropping 6 per cent to €1.55.
Food technology and ingredients company Kerry was up 2.7 per cent at €78.68 four days after chief executive Edmond Scanlon said the company was open to inquires about the possible sale of its legacy Irish dairy business, which has been in limbo since a 2021 strategic review.
The co-op, Kerry Group’s largest shareholder, had been in discussions with the listed company about a possible deal that would see Kerry’s traditional dairy operation, which includes brands such as Dairygold, Charleville and Kerry Low-Low spread, spun out into a joint venture in which the co-op would take a 60 per cent stake but so far the discussions have led nowhere.
Europe
The Stoxx Europe 600 was little changed following the previous week’s 1.4 per cent surge that took the gauge to within four points of its January 2021 high. Basic resources stocks led declines after iron ore tumbled, while the technology sector also underperformed. Defensive sectors, including telecoms and healthcare, posted gains.
Among individual movers in Europe, AstraZeneca climbed more than 3 per cent after trial data showed its Tagrisso drug slowed disease progression in lung cancer patients. German arms manufacturer Rheinmetall advanced as much as 4 per cent after announcing it will open a new plant in Ukraine. Banco Santander rose after kicking off a share buyback.
“Our base case remains that equities will end the year higher than current levels, but we do not expect it to be a straight path,” said Mohit Kumar, the chief economist for Europe at Jefferies International Ltd. “We are looking for a bit of a pullback in the near term, which would provide better levels to reset long positions.”
London
British equities started the week on a sombre note as fading hopes of interest rate cuts by global central banks weighed on sentiment, although gains in AstraZeneca on the US FDA’s approval for its lung cancer drug capped losses.
The blue-chip FTSE 100 index held its ground at 7,710.98 points as of 0850 GMT on Monday, while the mid-cap FTSE 250 index was flat at 19,185.22 points.
Both indexes snapped a two-week losing streak last week amid investors optimism about an early interest rate cut from the Bank of England after domestic economic data signalled slowing inflation.
However, souring rate cut prospects globally have dented the bets, with money markets now pricing in around 68 basis points cut from the central bank this year, compared with around 72 bps last week.
“With a key inflation reading, the producer prices index, coming in hotter than expected on Friday, investor hopes of rapid cuts to interest rates by the Federal Reserve have cooled off, leading to more risk-off sentiment,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown in a note.
Aiding the dour mood, Bank of England chief economist Huw Pill said on Friday that so far he had seen only “quite modest and tentative evidence” that inflation would fall back to and stay at the central bank’s 2 per cent target.
Among other stocks, Currys soared 33.1 per cent after Chinese ecommerce group JD.com said it was evaluating a takeover of the British electricals retailer and laying the ground for a bidding war after the group rejected a rival £700 million (€818 million) deal.
New York
US markets were closed for holidays
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