European stocks eke out fresh record as ECB raises recovery outlook

European stocks inched to fresh peaks on Thursday as the European Central Bank raised its recovery outlook and promised to keep ample stimulus flowing, while travel stocks fell after a recent run of gains.

The pan-European Stoxx 600 index was up just 0.1 per cent, but at a fresh record high of 455.76 points, while the narrower index of euro zone stocks fell 0.1 per cent.

ECB president Christine Lagarde said policymakers agreed to make further emergency purchases over the next quarter "at a significantly higher pace" than during the first months of the year" but gave no further detail about the expected levels.

The central bank now sees 2021 euro zone economic growth at 4.6 per cent, above the 4 per cent projected in March.

European shares steady near record levels ahead of ECB policy

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Inflation projections were also raised, with the ECB expecting price growth at 1.9 per cent this year, in line with its target and above its last projection for 1.2 per cent.

"The ECB's main mission today was to avoid any taper talk and not harm the still tentative economic recovery or allow bond yields to surge prematurely," said Carsten Brzeski, global head of macro at ING. "It accomplished its mission: the ECB seems to have bought some time without starting the taper talk."

DUBLIN

Ryanair fell nearly 3 per cent to €16.40 amid a widespread decline for travel stocks. While the sector is reopening there are differing opinions on how soon normal activity will resume and whether the consumer appetite for travel will be as strong as some have predicted.

The ECB's more optimistic outlook for the euro area economy did not stop Bank of Ireland and AIB from falling. The State's pillar banks fell by 0.1 per cent and 1.4 per cent respectively.

Packaging giant Smurfit Kappa was buoyed by the ECB's stronger-than-expected outlook, increasing by 1.3 per cent to €44.19.

Hotel chain Dalata also fell by 1.9 per cent despite a pick-up in spending on accommodation. Food group Kerry and Paddy Power Betfair owner Flutter were little changed on the day.

EUROPE

European travel and leisure stocks dropped 1.2 per cent following recent gains for the sector on optimism about economic reopenings.

Automakers fell for the third straight day, with German carmaker Volkswagen down 0.4 per cent after a report said it expects a shortage in semiconductor supply to ease in the third quarter but sees the bottlenecks continuing in the long-term.

French digital music company Believe, which helps distribute music via deals with platforms such as Spotify and Apple Music, tumbled 17.8 per cent in its stock market debut.

LONDON

Britain's blue-chip index closed slightly higher on Thursday, aided by gains in telecoms group BT and pharma majors, while doubts over the UK's reopening plans later this month hurt the domestically focused mid-cap index.

Shares in BT Group jumped 6.6 per cent to hit their highest since January 2020 after telecoms billionaire Patrick Drahi's Altice Group bought a 12.1 per cent stake worth about £2.2 billion, making it the largest shareholder.

"Altice is an established name in the telecoms space and the purchase of a 12 per cent holding in BT is a significant move," said AJ Bell investment director Russ Mould. "It has been said for years that UK assets are cheap and 2021 is proving to be the year when investors finally put their money where their mouth is."

The export-heavy FTSE 100 ended the day up 0.1 per cent , also boosted by drugmakers AstraZeneca and GlaxoSmithKline.

NEW YORK

US stocks rose and the S&P 500 hit a record intraday high as investors juggled signs of a swift economic recovery with concerns over the Federal Reserve tapering its massive monetary stimulus.

The Labor Department said its consumer price index increased by a more-than-expected 0.6 per cent last month. In the 12 months through May, CPI accelerated at its biggest year-on-year increase since August 2008. The jump partly reflected the dropping of last spring's weak readings from the calculation. These so-called base effects are expected to level off in June.

"The numbers were slightly more than expected, but not way outside of the range ... I don't think this going to change the Fed's view of keeping rates very low," said Mark Grant, chief global strategist, B Riley Financial.

The S&P 500 hit a record high of 4,249.74. But heavyweight technology stocks were among the top performers, indicating that investors were still sticking to sectors that had proven reliable through the Covid-19 pandemic. Focus will now be on the Fed’s monetary policy meeting next week for more clues about the central bank’s stance on tapering its massive stimulus.

A separate report on Thursday from the Labor Department also showed the number of Americans filing for jobless claims fell less than expected last week. – Additional reporting: Reuters