European shares advanced on Monday, extending the year’s upbeat start to a second week as China reopened its borders on Sunday and US and European data soothed nerves about further aggressive rate hikes by major global central banks.
The pan-European Stoxx 600 closed 0.9 per cent higher, continuing its rally after a slew of positive data – including strong euro-zone factory activity and a drop in the region’s headline inflation – indicated a milder-than-expected recession and easing price pressures.
That, along with data showing a moderation in US wage increases, has calmed market fears – for now – that the US Federal Reserve and the European Central Bank would continue with their aggressive monetary policy tightening.
The Iseq overall index advanced 1.3 per cent to 7,735.20. However, banking stocks were out of favour as they are among the main beneficiaries from rising official interest rates. AIB lost 2.7 per cent to €3.74, while Bank of Ireland declined by 1.2 per cent to €9.40.
Cairn Homes, led by chief executive Michael Stanley, jumped 4.4 per cent to 95.6 cent after the housebuilder issued a strong trading update, saying it delivered 1,525 units last year and that it had full planning permission for all the units it expects to build this year.
This contrasted with rival Glenveagh Properties, which last week lowered its completions forecast amid problems securing planning permissions in a timely manner. Still, Glenveagh managed to edge 0.5 per cent higher on Monday.
Corre Energy added 2.7 per cent to €3.10. Analysts at German investment bank Berenberg issued a buy recommendation on shares in the energy storage developer.
The UK’s exporter-heavy FTSE 100 closed at a more than three-year high on Monday, led by commodity-linked stocks, as China’s reopening of its borders reinforced hopes for a rebound in the world’s second-largest economy. The blue-chip index closed 0.3 per cent higher at 7,724.94.
Industrial metal miners and energy companies gained between 1 and 2 per cent as copper and crude prices climbed on prospects of increased demand after the move by Beijing.
Among single stock news, shares of engineering contractor Keller Group fell 12 per cent after it warned its annual operating profit would be slightly below expectations after financial reporting fraud in its Australia-based unit.
Game developer Frontier Developments crashed 42.6 per cent after downgrading its 2023 guidance. Devolver Digital, another gaming stock, slumped 12.6 per cent after the company reported lower-than-expected performance for the second half of 2022 financial year.
AstraZeneca slipped 0.4 per cent as it struck a deal to buy US-based biopharmaceutical firm CinCor Pharma for up to $1.8 billion (€1.67 billion) to strengthen its pipeline of heart and kidney drugs and grow beyond its mainstay cancer business.
Rate-sensitive tech stocks rose 3.4 per cent. Industrial production in Europe’s largest economy, Germany, rose slightly more than expected in November, adding to the optimism and lifting the Dax in Frankfurt 1.3 per cent higher.
Swiss plumbing supplies company Geberit gained 4.3 per cent, after Goldman Sachs upgraded its stock to neutral – the equivalent of hold – from sell. Goldman said it sees fewer risks related to energy prices and margin improvements from raw materials in 2023 and into 2024 for the plumbing supplies company.
Miners added 2.2 per cent as base metal prices advanced on hopes of demand recovery from top consumer China.
The Nasdaq was up more than 2 per cent in midafternoon trading with Big Tech and growth stocks spearheading gains on Wall Street as recent signs of a cooling labour market supported bets of a slower pace of interest rate hikes by the Federal Reserve.
Megacap growth stocks Apple, Alphabet and Microsoft gained more than 2 per cent each.
Tesla jumped after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signalling the recent price cuts could be stoking demand.
Bucking the trend, Macy’s and Lululemon Athletica fell sharply on Monday following dour holiday-quarter forecasts from both retailers. – Additional reporting: Reuters