Business World

Tuesday 16 October 2018

European shares boosted by earnings

A security guard walks past a montage of U.S. $100 dollar bills outside a currency exchange bureau in Kenya's capital Nairobi
A security guard walks past a montage of U.S. $100 dollar bills outside a currency exchange bureau in Kenya's capital Nairobi

Reuters

European shares rose yesterday thanks to a slew of well-received results, though banks were a weak spot after HSBC reported weaker-than-expected earnings and said it needed as much as $7bn (€5.6bn) of fresh capital.

The pan-regional STOXX 600 benchmark ended the session with a gain of 0.6pc, while the banking index declined 0.1pc.

A weaker euro also helped eurozone stocks make headway after a lacklustre start to the week.

HSBC dropped 3pc after its trading update, the last under outgoing CEO Stuart Gulliver, who has pushed through a painful restructuring of Europe's biggest bank by market value.

Credit Suisse analysts said HSBC's pledge to undertake share buybacks "as and when appropriate" could mark a change in capital-return strategy by the new management.

At home, earnings results did little to buoy sentiment. Shares in Kerry Group were down 4.8pc after it reported a drop in profits at its consumer foods arm. C&C was weaker after its results and Glanbia fell ahead of its results today.

In currencies, sterling recovered against the dollar and rose against the euro after a media report said the European Parliament would call for giving Britain "privileged" single market access.

Growing hopes that Britain and the European Union can agree a transition deal, and then terms for the UK that allow it to remain as close as possible to the trading bloc, have helped support sterling this year.

In Vienna UK Brexit Minister, David Davis, said both sides could reach a deal to access each others' markets".

An EU summit in late March is expected to be crucial for the progress.

Irish Independent

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