European shares gain as easing US data fuels rate-cut talk

European shares rose on Wednesday, with rate-sensitive sectors like property jumping after US inflation expectedly dipped in May to fuel speculation that the Federal Reserve could start easing interest rates soon.

The pan-European Stoxx 600 closed 1.2 per cent higher after falling for the last three sessions, its biggest single-day percentage jump since January.

Global sentiment remained upbeat after data showed US consumer price growth eased by 0.1 percentage point on the month to 3.3 per cent in May, while underlying inflation pressures abated last month. Traders boosted bets that the Fed will cut interest rates by September following the data.

Dublin

The Iseq All-Share index rose 1.1 per cent to 9,681.21. Home builders were among sectors in demand as investors became more optimistic about rate cuts internationally. Cairn Homes added 1.2 per cent to €1.68, while Glenveagh Properties increased 1.1 per cent to €1.34.

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Banks, which typically do well in a rising interest rate environment, were mixed, with AIB down 0.1 per cent at €4.91, while Bank of Ireland edged 0.8 per higher to €9.91.

Molten Venture jumped 6 per cent to €3.88 as investors digested its annual report. The venture capital company increased the value of tis stake in Revolut by 20 per cent to €65.1 million in the year to March.

Smurfit Kappa dropped 1.5 per cent to €42.01 on the eve of a shareholder vote of its planned merger with US peer WestRock.

London

London stocks rebounded on revived hopes of interest rate cuts in the near future, with the blue-chip FTSE 100 closing 0.8 per cent higher in its best day in over a month.

Meanwhile, UK data showed that economic output was flat in April and the rebound in the economy came to a halt.

“Signs that the UK economy’s recovery has stalled added to expectations that the Bank of England could cut interest rates sooner. The prospect of the Fed also cutting sooner is helping global sentiment,” said Fiona Cincotta, senior market analyst at City Index.

In the London market, the industrial support sector gained 3.7 per cent, leading a broader rally. Rentokil Initial surged 13.7 per cent to top the FTSE 100, after Bloomberg News reported that Nelson Peltz’s Trian Fund Management has amassed a significant stake in the pest-control firm.

In corporate news, life insurer Legal & General lost 5.5 per cent after planning a £200 million pound (€237 million) share buyback and a merger of its investment units.

Europe

European automakers such Volkswagen and BMW slipped around 1 per cent each on fears of Chinese retaliation after the European Commission said it would impose duties on imported Chinese electric vehicles.

Luxury German manufacturer Porsche Holding dropped 7.2 per cent as its shares traded ex-dividend.

European equities hit record highs last week after the European Central Bank’s (ECB) first rate cut in five years but have since pulled back due to political tremors domestically.

France’s CAC 40 ended 1 per cent higher after logging sharp declines in the last two sessions, when French President Emmanuel Macron called for snap legislative election.

Umicore slumped 7.5 per cent after the Belgian metal recycling group lowered its 2024 profit forecast.

Finland’s Konecranes jumped 7.6 per cent after the engineering group said it had raised its profitability outlook for the full year.

New York

US stocks were broadly higher in early afternoon trading, with the S&P 500 and the Nasdaq touching fresh record highs after softer inflation data lifted hopes for central bank rate cuts, while Apple overtook Microsoft to become the world’s most valuable company.

Meanwhile, Apple’s shares climbed to a record high, dethroning Microsoft for the first time in five months, as the iPhone maker’s market valuation rose to $3.24 trillion (€3 trillion) versus Microsoft’s $3.23 trillion.

The latest spurt came soon after Apple launched its artificial intelligence-integrated products on Monday, sprinting past AI chip powerhouse Nvidia’s $3 trillion valuation.

Oracle gained after forecasting double-digit revenue in fiscal year 2025 after the bell on Tuesday. – Additional reporting, Reuters

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