European shares edge higher as interest rate doubts leave investors cautious

European stocks ended lower on Friday and down for the week, as signs of persistent US price pressures and a recovering euro zone economy cast doubt over prospects for several interest rate cuts from major central banks this year.

Rate cuts bring cheaper financing for companies and consumers, which can translate into more business and profits.

Dublin

The Iseq index ended down 0.5 per cent, with the market dragged into the red by a decline for Ryanair, which ended an up-and-down week on a negative note. The airline finished 3.6 per cent lower on Friday at €17.96, and was joined in the red by Kerry Group, which fell 0.6 per cent to €78.10.

It was a better session for Smurfit Kappa, with the packaging group posting a 1 per cent gain to close at €45.60, and for Kingspan, which added 0.5 per cent to finish at €90.95.

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AIB edged up 0.5 per cent to €5.20, but Bank of Ireland was weaker, nudging down 0.3 per cent to €10.57.

London

London’s FTSE 100 slipped 0.3 per cent, falling for the fourth straight session, as receding expectations of interest rate cuts across large economies and political uncertainty in advance of the general elections at home weighed on investor sentiment.

However, the domestically-focused FTSE 250 mid-cap index ended 0.7 per cent higher, snapping three sessions of declines.

The utilities sector fell for a second consecutive session, dragged down by infrastructure firm National Grid, which lost 3.7 per cent.

AJ Bell fell 4.6 per cent after the investment platform’s founder sold 7.5 million shares in the company. Redcentric shares jumped 12.8 per cent after news the IT services group was working with financial adviser Lazard on an attempt to sell the company.

Europe

The pan-European Stoxx 600 index dipped 0.1 per cent, marking a weekly loss of nearly 0.4 per cent. Investors grew more cautious after European policymakers warned about monetary easing beyond June, indicating they were keen to avoid a flare-up in price pressures.

Euro zone bond yields recorded their biggest weekly rise in a month, after a survey showed euro zone business activity expanded at its fastest pace in a year in May, while separate data confirmed that Germany’s economy expanded in the first quarter of 2024.

Acciona slid 7.1 per cent after the Spanish construction and energy conglomerate lowered its forecast for core earnings growth this year based on current forecast energy prices.

Renault rose 5.2 per cent and was among top performers on the main index after the French carmaker announced a share buyback plan and UBS upgraded the stock to “neutral” from “sell”.

Equinor said it and its partners in the North Sea Troll gasfield, Europe’s largest, will invest $1.13 billion (€1.04 billion) to further boost production, sending shares of the Norwegian energy company down by 2.7 per cent.

United States

US stock indexes climbed on Friday, regaining some lost ground following a weak session on Wall Street after inflation concerns rekindled monetary policy caution in advance of a long weekend.

The tech-heavy Nasdaq jumped over 1 per cent and was on track for its fifth straight weekly advance, while the blue-chip Dow was set for its first weekly decline in five weeks after dropping to a two-week low on Thursday.

Nvidia shares rose 0.6 per cent after jumping more than 9 per cent a day earlier, closing above the key $1,000 mark and adding around $218 billion to its market value.

Workday dropped 13.9 per cent after the human resources software provider cut its annual subscription revenue forecast.

Ross Stores jumped 9.8 per cent after posting first-quarter results above estimates and raising its annual profit forecast. – Additional reporting: Reuters

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