Recession and bank fears weigh on European shares

Ongoing recession fears and more bad banking news dragged on European markets on Wednesday while strong tech company results buoyed Wall Street.

Dublin

Shares in building materials giant CRH slid 3.5 per cent to €43.95 despite the index heavyweight’s forecast that first-half earnings would beat the €2 billion that the group reported for the same period in 2022.

CRH also said in a trading statement that it had strong shareholder backing for its plan to list the Irish-based manufacturer’s shares in New York. The stock hit a low of €43.26 during the day, despite the upbeat statement.

Dealers said CRH would have to come out of European indices as a result of its move, while it could take time to be listed in those that track New York-listed shares.

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“The update was fine, but it’s the bigger story that people are looking at, there’s a lot of moving parts to this,” said one trader.

CRH shareholders will vote on the New York move in early June. The dip in the group’s shares contributed to a fall in the Iseq index of Irish shares on Wednesday.

Unlike many of their European peers, Irish banks proved popular with investors. AIB rose 2.19 per cent €4, the first time it broke the €4 mark in more than six weeks, dealers said. Its peer Bank of Ireland gained 1.3 per cent to close at €9.82.

Ryanair slipped 1.85 per cent to €14.55. Traders said “good buying interest” had given the airline’s shares altitude recently, so some investors may have opted to take a profit on Wednesday.

Paddy Power owner Flutter Entertainment was up 0.55 per cent at €181.65 ahead of its annual general meeting on Thursday.

London

Housebuilder Persimmon’s shares were up 5 per cent at 1,298.5 pence sterling just before trade closed on Wednesday. The group said the number of houses it expected to build this year would match the higher end of its previous forecasts.

The news lifted rival Taylor Wimpey 3.72 per cent to 125.6p while London-listed Irish builders’ supplier Grafton Group, which earns a large proportion of its revenues in Britain, was up 1.3 per cent at 847.6p, shortly before the market closed.

Standard Chartered reported that its first-quarter pretax profit jumped 21 per cent, beating expectations. Its shares had added 2.16 per cent to 634p by 4:55pm.

Drax Group’s shares rose 3.8 per cent at one point after the power generator announced a £150 million share buyback programme.

Gaviscon and Dettol maker Reckitt Benckiser slipped 3.45 per cent to 6,276p after naming company insider Kris Licht as its new chief executive.

Europe

Europe’s Stoxx 600 index dipped as finance stocks fell, sparked by US lender First Republic’s report on Tuesday that deposits had plunged below $100 billion.

Dassault Systèmes’ shares slid more than 8 per cent after the French software developer reported results showing poorer margins than expected. Its stock was more than 6 per cent down at €34.99 late on Wednesday.

Yoghurt-maker Danone’s shares rose 1 per cent in early trade after the company boosted its outlook for this year, saying it had managed to pass on price increases to customers.

US

Tech giant Microsoft’s shares were up more than 8 per cent at $297.83 at 11:40am New York time after the multinational reported $18 billion profit for the third quarter of its financial year and forecast continued strong results.

Google parent Alphabet had inched up around 0.8 per cent at the same time to $104.64. The group said first-quarter revenue was up 3 per cent at $69.8 billion.

Wall Street was waiting on results from Facebook owner Meta Platforms later on Wednesday.

Dealers said strong tech results were helping to ameliorate investors’ fears about the banks’ weakness. – Additional reporting: Reuters