Sunday 17 November 2019

Irish and European stocks see return to growth

Greek Prime Minister Antonis Samaras. Reuters
Greek Prime Minister Antonis Samaras. Reuters Newsdesk Newsdesk

European stocks rose the most in almost three weeks yesterday afternoon amid investor optimism that a weaker-than-forecast inflation report bolsters the case for the European Central Bank to begin quantitative easing.

The Stoxx Europe 600 Index added 1pc to 335.01 at 2:23 pm in London, extending gains after data showed the euro-area inflation rate fell below zero for the first time in more than five years. Prices slid 0.2pc in December, the European Union's statistics office said. Economists had predicted a decline of 0.1pc.

"The market is bouncing a bit on increased optimism of QE," said James Buckley, who helps oversee about $48bn (€40.6bn) as a portfolio manager at Baring Asset Management in London.

"A deflationary print gives more ammunition for those who are seeking QE."

The European equity gauge is still down 4.6pc from an almost seven-year high reached last month, amid a slump in oil and gas companies and growing concern over Greece as Prime Minister Antonis Samaras said this month's election could lead to the nation exiting the euro area. The ASE Index fell 1.7pc today, extending its lowest level since 2012.

"Inevitably the magnitude of the sell-off we saw at the start of this year in such a short space of time is also attracting buyers back to the market," Mr Buckley said.

Brent crude slumped below $50 a barrel today, 57pc less than the peak of $115.71 reached in June.

UBS analysts say investors should avoid oil until the "free fall" ends. Traders are ignoring supply disruptions that would normally boost prices, ABN Amro Bank analysts said.

"It's not clear that anyone can answer how low it will go," Ed Morse, global head of commodities research for Citigroup in New York, said by phone.

"It's always hard to call a bottom. The Saudis took the shale revolution seriously and are acting accordingly. They're testing how much production growth can be curtailed by the drop in prices," Mr Morse added.

In Dublin the Irish index of Irish shares was up by less than half of one percent yesterday afternoon, led higher by a 2.6pc rise in the heavily weighted building materials giant CRH.

Smurfit Kappa and Kerry Group were also gainers a day after sending representatives to a New York equity conference hosted by Davy. Kenmare Resources shares spiked in the afternoon.

On the other side, Merrion Pharmaceuticals pared some of the gains made in recent days, while Permanent TSB shares fell 3pc.

(Additional reporting Bloomberg)

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