Tuesday 21 November 2017

European shares pushed up by commodities rally

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

European shares edged higher yesterday, supported by a rally in commodities-related stocks along with gains among Germany's Wirecard and France's Bouygues after reporting results.

The STOXX 600 index climbed 0.1pc, on track for its third straight session of gains.

Among the top risers, German payment processor Wirecard rose 5.3pc after issuing guidance for 2017, while France's Bouygues also rose 4pc after maintaining its outlook following a forecast-beating rise in third quarter operating profit.

B&M European Value Retail's shares also rose 4.7pc after a broker upgrade.

"We believe B&M's 33pc share price fall since peak provides a buying opportunity. We think B&M is well positioned for a tough UK consumer environment," analysts at Jefferies said in a note, upgrading their rating on the stock to "buy".

A 5pc fall in Bayer, however, weighed on the chemicals sector which dropped 1pc and was the worst-performing European sector. Among the biggest fallers, shares in Ocado dropped more than 6pc with analysts citing pressure from grocer Morrison's extension of its Amazon deal to offer a new same-day grocery delivery service to Amazon Prime customers.

Hugo Boss's shares also declined, dropping 5.7pc after its new ceo said that the fashion house should return to growth in 2018, with plans to simplify the brand portfolio.

While the basic resources index and oil stocks gained, investors favoured more defensive sectors, such as telecoms and utilities, gaining 0.8pc and 0.3pc respectively as the reflationary trade continued to lose steam.

Since Donald Trump's victory in the US presidential election, investors had been betting on potential beneficiaries from his plans to boost spending on infrastructure and deregulate the banking sector.

These hopes have boosted shares in miners, construction companies and banking stocks. Analysts, however, cited the upcoming Italian referendum and elections in Europe next year as reasons to be cautious.

"I think markets are perhaps already ... moving on to the other political risk we're facing," Mike van Dulken, head of research at Accendo Markets, said.

"You can't really take on any more risk on the hope that a populist vote will still lead to policy that will deliver growth, which would be good, because we don't know if we're there yet."

Dublin's Iseq overall index was down 0.98pc at 6200.58, down 65.61 points in late afternoon. (Reuters)

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