European blue-chip stocks hit 22-year high amid signs of cooling US inflation

Europe’s blue-chip stocks hit their highest level in 22 years on Wednesday as investors sought mega-cap quality stocks and considered whether the US Federal Reserve could pause its rate hikes amid signs of cooling US inflation.

The blue-chip Stoxx 50 index touched its highest since 2001 before the inflation data, but came off that level later, eking out only marginal gains for the day. The broader pan-European Stoxx 600 index ended 0.1 per cent higher, also having chopped early gains.

A US labor department report showed that consumer prices climbed 5 per cent on the year in March, down from 6 per cent in February and a 40-year high of 9.1 per cent last June.

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Irish shares closed lower with the Iseq All Share index falling 0.4 per cent to 8,231.53.

Banking stocks were lower, with AIB off 0.7 per cent at €3.69 and Bank of Ireland declining by 0.9 per cent to €9.36. Home builders were similarly out of sorts, with Glenveagh Properties falling 2.3 per cent and Cairn Homes declining by 0.6 per cent.

Ires Reit, the Republic’s largest private residential landlord, jumped almost 4 per cent to 97.7 cents after an activist shareholder said that it would be voting against certain directors as it pursues an agenda for the company to put itself up for sale.

CRH was also in demand, rising 1.2 per cent to €44.22, as investors continued to digest news that the building materials giant plans to drop its Irish listing in order to ensure eligibility to be included on major US indices as it moves its main listing to the US.

LONDON

London’s FTSE 100 closed 0.5 per cent higher supported by healthcare and energy stocks as signs of cooling inflation in the US, the world’s largest economy, boosted investor sentiment.

Pharmaceutical companies surged 1.1 per cent and energy heavyweights BP and Shell rose 0.5 per cent and 0.6 per cent, respectively tracking strength in crude oil prices.

Global stocks rallied after data showing a moderation in US headline inflation in March spurred hopes that the Federal Reserve may soon pause its monetary tightening.

But analysts pointed to still sticky core inflation, and said the Fed was likely to deliver another 0.25 percentage point rate hike in May.

Among other major movers, Petrofac slumped 13.2 per cent after the company said it expected to report a wider operating loss.

De La Rue plunged 19 per cent and hit a record low after the banknote printer said it expects full-year profit to be below market expectations.

West Africa-focused oil producer Tullow Oil slid 6 per cent on Jefferies’ downgrade to underperform from hold.

EUROPE

Rate-sensitive real estate stocks were the top sectoral gainers on the Stoxx 600 on Wednesday, rising 1.1 per cent, while travel and leisure and technology stocks limited gains.

Investors are still digesting the International Monetary Fund’s warning that lurking financial system vulnerabilities could erupt into a new crisis and slam global growth this year.

Shares of AB Volvo jumped 7.4 per cent as the truck-maker reported record first-quarter profit on higher revenue and margins.

Mercedes-Benz Group gained 1 per cent after its first-quarter sales rose on a boost from electric vehicles and premium cars.

German drugmaker Merck slid 7.4 per cent, after the US health regulator paused the initiation of new patients on the company’s evobrutinib drug.

NEW YORK

US stock indexes had given up most of their gains by early afternoon trading as investors reassessed the outlook for US monetary policy following inflation data.

Major technology and other growth stocks such as Alphabet, Tesla and Amazon fell into negative territory.

Investors are also awaiting the first-quarter earnings season, which begins in earnest on Friday with results from three major banks, Citigroup, JPMorgan and Wells Fargo.

American Airlines Group dropped 8 per cent after forecasting a lower-than-expected profit for the first quarter as the carrier battles high fuel costs. – Additional reporting: Reuters