Business Irish

Wednesday 12 December 2018

European shares relief after tough quarter

Traders work on the floor of the New York Stock Exchange (NYSE) in New York
Traders work on the floor of the New York Stock Exchange (NYSE) in New York

Helen Reid

Merger and acquisition activity gave European shares some relief yesterday after a tech-led sell-off across global markets earlier in the week, but the STOXX 600 still posted its worst quarter in the last two years.

The STOXX 600 ended the month on a positive note, up 0.44 points at 370.87 points, but closed the quarter down 4.7pc despite starting with a global equities rally in January.

The quarter developed into a challenging one for stock markets with investors navigating a sharp spike in volatility, rumbling trade tensions and anxiety over the tech sector.

In Europe, slowing macroeconomic indicators have been taken as a "sell" signal for equities, which had enjoyed a lift for most of last year on expectations of stronger economic growth.

"Support from attractive valuations and fading FX headwinds is not enough to override the signal from relative macro surprises," said Deutsche Bank equity analysts, reaffirming their underweight position on European equities versus the US.

Car stocks led gains as Renault jumped 5.7pc to a more than 10-year high after Bloomberg reported the French firm was in talks to merge with Nissan.

Hopes of dealmaking spread to other auto stocks, driving them up too.

Daimler, Peugeot, Porsche and Volkswagen rose 3.4pc to 4.4pc.

M&A also drove stock gains in other sectors.

GKN shares surged about 9pc after Melrose Industries announced it had narrowly clinched its £8bn (€9bn) takeover of the British engineer after a three-month battle for control of the FTSE 100 company.

Irish Independent

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