European shares ended higher on Monday, helped by gains in healthcare stocks and a report showing euro zone inflation eased further in July, though upbeat growth data tempered optimism about a rate hike pause.
The pan-European Stoxx 600 ended up 0.1 per cent. The index climbed 2 per cent in July, gaining for the second month in a row.
Data showed euro zone consumer prices grew by 5.3 per cent this month versus 5.5 per cent in June, extending a downtrend that started in the autumn. Excluding energy and unprocessed food, prices increased by 6.6 per cent after a 6.8 per cent rise a month earlier.
Another set showed the bloc returned to growth in the second quarter, though Germany, the euro zone’s biggest country, registered no growth and Italy suffered a contraction.
“The news in Europe is a bit more mixed (with) the preliminary data in Italy coming in much weaker than expected, although the euro zone is not doing too badly,” said Andrea Cicione, head of research at TS Lombard. “The picture is not as encouraging as the US and so the markets are trying to figure out what matters most.”
Dublin
Bank of Ireland rose over 3 per cent to €9.59 after the lender reported better-than-expected half-year earnings. Pretax profits soared 138 per cent to €1.04 billion, beating market expectations, as the company earned large amounts on surplus cash stored with the Central Bank of Ireland.
It also noted that customers had been slow to move savings to its gradually improving interest-earning deposit products. Net interest income rose 68 per cent in the first six months of the year to €1.8 billion, it said.
The strong earnings environment for banks as evidenced by the results buoyed AIB shares also, which rose by 2.4 per cent to €4.27. Permanent TSB also rose by 1.8 per cent to €2.28. Ryanair and Smurfit Kappa were both down, however, despite stronger growth numbers for the euro zone.
Europe
Healthcare stocks led gains, with Novo Nordisk up 3.4 per cent as it launched its blockbuster weight-loss drug Wegovy in Germany. The German DAX ended 0.1 per cent lower, but hovered near record high levels hit recently.
Italy’s FTSE MIB added 0.5 per cent to touch fresh 15-year highs, lifted by the state-controlled defence and aerospace group Leonardo.
Limiting further upside on Monday, Heineken shares slid 8 per cent after the world’s second largest brewer by volume cut its 2023 profit growth forecast as an economic slowdown in Vietnam depressed first-half earnings.
Heineken’s peers Anheuser-Busch InBev and Carlsberg shed over 2 per cent each.
An index of euro zone banks edged up 0.2 per cent after the European Banking Authority’s (EBA) annual stress test results showed three of 70 banks from the European Union failed to meet binding capital requirements.
London
British stocks edged higher on Monday as firmer commodity prices supported the energy and mining sectors, but beverage-related shares fell on Dutch firm Heineken’s dour outlook.
The exporter-heavy FTSE 100 closed up 0.1 per cent, logging a monthly gain of over 2 per cent in July as risk sentiment flourished after data earlier this month showed domestic inflation eased more than expected.
Heavyweight energy stocks gained 1.3 per cent on higher oil prices and after the UK government announced plans to grant more than 100 new oil and gas licences in North Sea.
Industrial metal miners rose 0.9 per cent as prices of most base metals advanced.
The Bank of England is widely expected to raise rates by a quarter-point to 5.25 per cent on Thursday, though economists and markets see a risk of a repeat of June’s surprise half-point hike.
Aer Lingus-owner CAG was the biggest gainer on the FTSE 100 index, up 3.6 per cent, after two brokerages raised their price target.
Telecom company BT Group slipped 1.7 per cent after naming Allison Kirkby, a board member and president and CEO of Sweden’s Telia Company, as its next chief executive.
US
Wall Street rose on Monday with key benchmarks set to end July higher on upbeat company earnings and hopes of a soft landing for a resilient US economy, while cooling inflation fuels bets on a rate-hike pause.
Investors await quarterly reports from Apple, Amazon and AMD later this week, while July ISM Manufacturing reading and three sets of employment data, including July’s non-farm payrolls, are also in focus.
Second-quarter earnings for S&P 500 companies are now estimated to have fallen 6.4% year-over-year, according to Refinitiv data. While still negative the forecast is an improvement from the 7.9% drop estimated a week earlier.
“It looks like investors are taking a little bit of a pause,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“The jury is still out on Amazon and Apple, and markets are waiting to see if we get some positive news like we got out of Meta or Google, or if we see somewhat disappointing news like we saw with Microsoft.”
The tech-heavy Nasdaq led Wall Street higher last week as megacap growth companies such as Alphabet, Meta Platforms as well as chipmakers Intel and Lam Research posted strong quarterly earnings.
Additional reporting Reuters
