European shares log best monthly performance since November 2020

European shares rose on Friday and logged their first monthly gain in four as a host of strong earnings from corporate Europe overshadowed fears of a global recession, with some strong economic data also lending support.

Boosting sentiment, the euro zone economy grew much faster than expected in the second quarter, with gross domestic product rising 0.7 per cent quarter-on-quarter in the April-June period for a 4 per cent year-on-year gain, strongly beating expectations. However, inflation rose to another record high of 8.9 per cent in July.

Dublin

The Iseq climbed 1.8 per cent, joining in the upbeat mood across European markets. AIB rose 3 per cent to €2.21 on a strong day for banking stocks and after it said it might beat its key 2023 profitability target on the back of rising interest rates and the purchase of much of Ulster Bank’s loan book. Bank of Ireland added 1.6 per cent to €5.58.

Kerry, which like AIB reported earnings figures, jumped 3.7 per cent to €103.25 after chief executive Edmond Scanlon said the company remained confident in its outlook and reaffirmed the food group’s full-year earnings guidance.

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Ryanair also made gains, rising 1.4 per cent to €12.76, but packaging group Smurfit Kappa was among the few fallers in the session, declining 1.7 per cent to €35.28.

London

The blue-chip FTSE 100 gained 1.1 per cent as commodity stocks jumped, while the mid-cap FTSE 250 climbed 1.6 per cent, with both now at seven-week highs.

Aer Lingus’s parent company IAG fell 2.6 per cent even though it returned to profit for the first time since the outbreak of the Covid-19 pandemic.

NatWest rose 8.1 per cent after the bank raised its full-year forecast and made a bumper payout to shareholders, lifting the banking index 1.5 per cent higher. But Standard Chartered slipped 0.5 per cent even as its first-half pretax profit rose 19 per cent and beat market expectations. Investors eyed results from its larger peer HSBC on Monday.

Oil majors BP and Shell climbed more than 2.5 per cent each, while miners added 2.7 per cent, tracking firm commodity prices.

Europe

The pan-European STOXX 600 climbed 1.3 per cent on Friday to a near two-month high, and logged its best monthly performance since November 2020. In Frankfurt, the Dax rose 1.5 per cent, while in Paris, the Cac 40 advanced 1.7 per cent.

Luxury stocks got a boost from strong quarterly sales growth at Hermes and L’Oreal. Shares of the Birkin bag maker gained 7.5 per cent, while those of the cosmetics group added 3.8 per cent.

Among other stocks, France’s BNP Paribas and Spain’s BBVA gained 2.9 per cent and 6 per cent respectively, as the lenders reported better-than-expected quarterly profits.

Carmaker Renault rose 5.1 per cent after upgrading its full-year outlook, saying its turnaround plan to improve profitability was delivering results in advance of schedule. But Signify fell 11.8 per cent after the world’s biggest maker of lights said its profit margins would decline this year.

US

The Nasdaq and the S&P 500 indexes rose in the first hours of trading and were on track for their biggest monthly gain in nearly 20 months, after upbeat earnings updates from Apple and Amazon and on hopes of a less aggressive monetary policy.

By early afternoon, Apple shares had gained 2.9 per cent after the company said parts shortages were easing and that demand for iPhones was unceasing despite consumers tightening other spending. Amazon shot up 11.4 per cent after it forecast a jump in third-quarter revenue from bigger fees from its Prime loyalty subscriptions.

However, gains on the Dow Jones were capped by Intel, which tumbled 8.9 per cent after it cut annual sales and profit forecasts and missed second-quarter estimates.

Additional reporting: Reuters